The US Securities and Exchange Commission (the “SEC”) has amended its reporting requirements under Section 16 of the Securities Exchange Act of 1934 (the “Exchange Act”) to reflect changes enacted under the Holding Foreign Insiders Accountable Act (the “HFIA Act”), which was adopted on December 18, 2025.1
Section 16(a) of the Exchange Act classifies directors, officers and persons who beneficially own more than 10 percent of any class of equity securities registered under Section 12 of the Exchange Act as “reporting persons”2 and requires such insiders to disclose their holdings of the issuer’s equity securities and transactions in such securities through public filings with the SEC. Previously, directors and officers of non-US companies qualifying as Foreign Private Issuers (“FPIs”) were exempt from these requirements. The HFIA Act reversed some of these exemptions, and consequently the new disclosure requirements for FPI insiders will take effect beginning on March 18, 2026. These amendments to SEC rules and forms under Exchange Act Section 16 implement the newly applicable HFIA Act requirements.
The reversals under the HFIA Act include parts of Exchange Act Rule 3a12-3(b), mandating that insiders of FPIs with a class of securities registered pursuant to Exchange Act Section 12 comply with the same share ownership reporting requirements as the officers and directors of domestic issuers. The SEC has also amended Exchange Ac Rule 16a-2, which subjects individuals to Section 16 requirements. Current exemptions from all of Section 16 will be removed and replaced with exemptions only from Section 16(b) (short-swing profit recovery) and Section 16(c) (prohibition on short selling). In effect, Rule 3a12-3(b) will no longer exempt insiders of FPIs with a class of equity securities registered under Section 12 from the filing obligations under Section 16(a) or Rule 16a-2. Ten percent holders of an FPI’s equity securities (who are not also directors or officers) will continue to be exempt, however. These amendments consequently expand the Form 3, 4 and 5 filing requirements under Section 16, meaning FPI insiders will now be required to file:
- Initial Ownership Reports (Form 3) within ten days of becoming an insider (or by March 18, 2026 for existing FPI insiders);
- Transaction Reports (Form 4) within two business days of any purchase, sale, gift or acquisition of the FPI’s shares; and
- Annual Reports (Form 5) within 45 days of the FPI’s fiscal year-end for any missed or deferred transactions.
Additional changes to note consistent with the HFIA Act include: (1) revising General Instructions 1.(a)(i), (ii) and (iv) to Form 3 to include directors and officers of FPIs and to exclude 10 percent holders of FPIs from the requirement to file the form, and (2) technical amendments to each of the Section 16 reports, which will now include an optional field for a foreign trading symbol, a postal code, and a country code as part of the address of the reporting person. Although certain individuals with foreign addresses who provide country codes in the “State” field already file Forms 3, 4 and 5, the increased number of filings by foreign individuals that presumably will result from the HFIA Act warrant a clearer designation of the reporting person’s country.
The SEC continues to examine whether foreign laws impose similar requirements on some FPI insiders, and retains the authority granted to it under the HFIA Act to exempt such persons based on its determination. We have yet to see clear guidance from the SEC whether it will avail itself of such authority and if so what criteria will determine if foreign laws impose sufficiently similar requirements for the exemption, but we will continue to monitor. For further information or assistance in complying with the new requirements, please contact Keith Billotti at (212) 574-1274 or billotti@sewkis.com, Edward Horton at (212) 574-1265 or horton@sewkis.com, Walter Van Dorn at (212) 574-1590 or vandorn@sewkis.com, or your primary attorney at Seward & Kissel LLP.
