December 19, 2025 Update
This memo has been updated since initial publication to indicate that the Act was signed on December 18, 2025.
Summary
The U.S. Senate has adopted legislation that will require directors and officers of many foreign private issuers (“FPIs”) to begin publicly reporting their ownership of and trades in the shares of FPIs of which they are insiders to the U.S. Securities and Exchange Commission pursuant to Section 16(a) of the U.S. Securities Exchange Act of 1934 (the “Exchange Act”).
The “Holding Foreign Insiders Accountable Act” (the “Act”) is included in the U.S. annual defense spending bill, which was signed into law by President Trump on December 18, 2025. The new reporting requirements will apply from March 18, 2026, 90 days after the Act’s signing.
The Act gives the SEC the authority to provide exemptions from the reporting requirements of Section 16(a), but only if the SEC determines the laws of a foreign jurisdiction already apply substantially similar requirements to the exempted person, security or transaction.
Section 16: Background
Section 16(a) of the Exchange Act requires directors, officers and 10% shareholders of companies with SEC‑registered equity securities to provide prompt public disclosure of transactions in such securities or derivatives of such securities. Reports are typically due before the end of the second business day following the day on which any trades are made and must be filed publicly on the SEC’s EDGAR electronic filing system.
Pursuant to Rule 3a12-13(b) under the Exchange Act, FPIs have historically been exempt from the requirements of Section 16. Instead, FPIs have been subject only to their home jurisdiction’s insider reporting requirement, if any, as well as the share ownership disclosure requirements in annual reports on Form 20-F.
New U.S. Reporting Requirements for FPI Directors and Officers
Required Disclosures
Section 16(a) as amended by the Act will require that directors and officers of FPIs file on the SEC’s EDGAR system statements in English of the amount of all equity securities of such issuers and derivatives of such securities which the director or officer beneficially owns, as well as subsequent changes in such ownership, for so long as the individual is a director or officer of the company.
The timing requirements for such filings will be the same as those currently applicable to directors and officers of U.S. domestic registrants:
- At the time any such security is registered on a national securities exchange or by the effective date of a registration statement filed pursuant to Section 12(g) of the Exchange Act;
- Within 10 days after the individual becomes director or officer of the issuer; and
- If there has been a change in ownership, before the end of the second business day following the day on which the subject transaction has been executed.
Filings will need to be made on Form 3 (for an initial statement of beneficial ownership), Form 4 (for changes in beneficial ownership), and Form 5 (for an end-of-year filing typically covering smaller transactions that were not required to be reported on a Form 4 or in respect of a failure to earlier file a required Form 4).
For directors and officers who are not subject to similar reporting requirements in their home jurisdiction, this reporting may be the first time that information about their individual shareholdings (including any share-based compensation they receive in their capacity as a director or officer) is publicly reported.
Scope of Officers Covered
The list of officers subject to Section 16(a) reporting obligations will align with the list of officers subject to the remuneration clawback policies that U.S.-listed companies were required to adopt following an SEC rule-making in 2022 that required that companies recover erroneously awarded incentive-based compensation from certain officers.
Under SEC rules, individuals that an FPI identifies as executive officers for purposes of reports on Form 20-F would be presumed to also be officers for purposes of Section 16(a) reporting. Two additional individuals would also be required to report under Section 16(a) if they are not otherwise considered to be executive officers: the principal financial officer and the principal accounting officer (or, if there is no such accounting officer, the controller). Both roles are specifically identified in the definition of officer applicable for Section 16(a) reporting and remuneration clawback policies.
For most companies, the principal financial officer will already qualify as an executive officer and, in some cases, will also serve as the principal accounting officer. However, if the principal accounting officer is a different person from the principal financial officer, or there is not a principal accounting officer, some companies may not consider that individual as an executive officer. Nonetheless, such individual will be subject to Section 16(a) reporting requirements.
“Deputized” Directors
In addition to individuals elected or appointed to serve on a company’s board, U.S. courts and the SEC have recognized that a corporation, partnership, trust or other person can be deemed a director for purposes of Section 16 where it has expressly or impliedly “deputized” an individual to serve as its representative on a company’s board of directors.
We believe that such entity or other person who designates an individual to serve as director would be deemed a director for purposes of the reporting provisions of Section 16(a).
Remaining Exemptions for FPIs
Section 16(a) as amended by the Act retains some of the existing exemptive relief for insiders of FPIs as compared to insiders of U.S. domestic registrants:
Section 16(a) Reporting Obligations Do Not Apply to Major Shareholders of FPIs
Section 16(a) as amended by the Act does not require beneficial owners of more than 10 percent of an FPI’s registered equity securities to file Section 16 reports. However, consistent with current law, persons holding substantial stakes in any U.S.-listed company, including FPIs, remain subject to the separate reporting requirements of Section 13(d), 13(g), and 13(f) of the Exchange Act as well as the share ownership disclosure requirements in annual reports on Form 20-F.
Section 16(b) Short Swing Profit Repayment Obligations Do Not Apply to FPI Insiders
In addition, directors and officers of FPIs will remain exempt from the complex requirements of Section 16(b)’s so-called “short swing” liability, which require insiders of U.S. domestic registrants to repay companies for profits on matching trades made in under a six-month period.
Potential Jurisdiction-Specific Exemptions
Because many foreign jurisdictions already require company insiders to report on their share ownership and trading, the Act permits the SEC, by rule, regulation, or order, to conditionally or unconditionally exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from the requirements of Section 16(a) if the SEC determines that the laws of a foreign jurisdiction apply “substantially similar requirements” to such person, security, or transaction.
Directors and key executives of FPIs listed in a number of jurisdictions (including Canada, the UK and Europe) are subject to very similar insider reporting requirements as those in Section 16(a). These entities represent many of the largest FPIs by market capitalization.
It is currently uncertain when and how the SEC will grant exemptive relief, including the jurisdictions that the SEC may determine apply substantially similar requirements as Section 16(a). We expect that such exemptive relief would be made by interim final rule or exemptive order without an often lengthy advance notice and comment process. However, because Section 16 reporting obligations for directors and officers of FPIs will commence 90 days after presidential approval of the Act, it is uncertain whether Section 16(a) reporting obligations may apply before the SEC finalizes such exemptive actions.
We are liaising with the SEC further on the potential for jurisdiction-specific exemptions.
Next Steps
Issuers should ensure affected directors and officers are prepared to make the required filings by mid-March 2026. While it is possible that companies subject to similar reporting requirements in certain jurisdictions may ultimately be exempted from the new requirements, it may take several weeks to collect relevant information and prepare initial Form 3 filings, including setting up directors and officers as filers on the SEC’s EDGAR Next system.
Timing
Existing directors and officers of FPIs will have 90 calendar days from the date of enactment of the Act to begin reporting under Section 16(a).
Thereafter, newly appointed directors and officers or the directors and officers of newly registered FPIs will need to adhere to the reporting requirements noted above.
While the Act contemplates rulemaking by the SEC to carry out the amendments made by the Act, we read the operative provisions of the Act that make Section 16(a) applicable to directors and officers of FPIs as self-executing, meaning they will become effective without further SEC rulemaking.
EDGAR Filing Codes
Many newly reporting individuals will need to obtain log-in codes from the SEC to enable them to make filings onto the EDGAR systems. Obtaining such codes can take a few weeks and requires notarization of the application form on Form ID. Individuals who are or have been directors at U.S. domestic issuers may already have EDGAR codes from their U.S.-company board or executive officer service, but should verify that they retain access. Filers who have lost passwords or have not yet enrolled in the SEC’s upgraded EDGAR Next system introduced this year may need to re-file a Form ID to re-obtain access.
Filing Responsibilities
The filing obligations under Section 16(a) apply to individual directors and officers, rather than to the company itself. However, company legal departments or company secretaries typically assist in ensuring compliance by covered individuals.
In particular, directors and officers often rely on company assistance to obtain EDGAR codes from the SEC and, on an ongoing basis, to submit the required forms to EDGAR or liaise with a financial printer. Note that any persons authorized to make filings (including financial printers) will need to be granted access through EDGAR Next to make a filing with the SEC on behalf of the individual making a Section 16(a) report.
Review Internal Policies on Trading by Insiders
FPIs will have adopted and disclosed policies on trading by insiders in connection with rule amendments previously adopted by the SEC. FPIs whose officers and directors will be subject to Section 16(a) should consider revisiting these policies or adopting new policies to require that directors and officers report trades internally to ensure compliance with new Section 16(a) reporting requirements.
Coordinate with Counsel
Companies new to Section 16(a) reporting should coordinate with external U.S. securities counsel to ensure that transactions and shareholdings are reported correctly. As noted above, many companies manage their insiders’ Section 16(a) reporting requirements in-house. However, counsel can assist in the first instance and going forward with navigating the complexities of Section 16(a) reporting and, if needed, obtaining SEC filings codes for in-scope individuals.