President Trump Signs Holding Foreign Insiders Accountable Act into Law

Section 16(a) of the Exchange Act for domestic issuers requires certain disclosures from their “insiders,” namely (a) those who own more than 10% of any class of any equity security and (b) any director or officer of the issuer of such securities. Such parties are obligated to disclose the total amount of equity securities (including derivative securities) beneficially owned, changes in ownership, as well as any other information required by Form 3, Form 4 and Form 5 reporting. Generally, Form 3 discloses insiders’ initial ownership of equity securities, Form 4 reports changes in such ownership (such as new purchases, sales and equity awards), and Form 5 is a fiscal year-end filing that discloses all other insider transactions not covered by Forms 3 and 4.

Historically, securities issued by FPIs were exempt from all such disclosure requirements. However, the HFIAA removed the exemption for officers and directors of FPIs, leaving only the exemption for 10% holders intact (although the U.S. Securities and Exchange Commission (SEC) can create additional exemptions if foreign laws substantially similar to Section 16(a) apply). While exempt from 16(a), 10% holders remain subject to Schedules 13D/G filings under Section 13(d) of the Exchange Act, and institutional holders (such as banks and hedge funds) are still subject to Section 13(f) reporting. As previously noted, the HFIAA only amends Section 16(a) of the Exchange Act. Securities issued by FPIs remain entirely exempt from Sections 16(b) and 16(c), which pertain to short-swing profit disgorgement and short selling prohibitions. The HFIAA tasked the SEC with promulgating regulations implementing the foregoing prior to effectiveness. However, the HFIAA would go into effect even if the SEC does not promulgate regulations within the 90-day deadline, so FPIs should take immediate steps to identify covered insiders and prepare for compliance.

Next Steps Ahead of March 18, 2026

FPIs and FPI Insiders
During this transition window, FPIs must initially identify the officers and directors subject to the HFIAA.

• Officers include the president, principal financial officer, principal accounting officer or controller, any vice-president in charge of a principal business unit, division or function, and any other officer or person performing a significant policy-making function for the issuer. The definition of officer under Section 16(a) generally mirrors the definition of “executive officer” as defined in the SEC’s regulations requiring disclosure of the implementation of an issuer’s clawback policy, as discussed in our previous client alert, which also applies to FPIs. Thus, the parties that an FPI deemed to be executive officers for the purpose of such policy can be used as a point of reference to identify its officers for the purpose of Section 16(a).
• Directors include any director of a corporation or any person performing similar functions (such as members of a board of managers of an LLC, trustees of a trust or members of a governing committee with authority comparable to a board of directors).

Further, FPIs must ensure the individuals identified above are enrolled in EDGAR Next and have access to functioning credentials. A Form ID must be submitted to obtain such credentials. EDGAR Next enrollment will allow the FPI’s directors and officers to make filings when the HFIAA becomes effective. If an FPI has not yet distributed directors’ and officers’ questionnaires in connection with its Annual Report on Form 20-F for FY 2025, it should consider including questions necessary for obtaining EDGAR Next access on behalf of the director or officer and possibly sign appropriate documentation concurrently with the delivery of such questionnaire. If an insider would prefer, they may designate the FPI or the FPI’s law firm to submit these filings on their behalf.

Each FPI insider must file their first Form 3 by March 18, 2026, subject to further regulations or guidance promulgated by the SEC. As a reminder, Form 3 is the insiders’ initial beneficial ownership report, whereby all interests in the issuer’s equity securities must be disclosed as of that date. By contrast, Form 4 has no fixed filing date and instead must be filed within two business days of a reportable change in beneficial ownership, unless an exemption applies. Form 5 discloses all other transactions, including those exempt from Form 4, and must be filed at the fiscal year end of the issuer. FPIs should closely monitor SEC announcements for any new guidance regarding these forms or their filing deadlines.

Newly U.S.-Registered FPIs
If a foreign company qualifies as an FPI and first registers equity securities in the United States after March 18, 2026, whether through an IPO, de-SPAC transaction, direct listing or other means of becoming publicly listed in the United States, its directors and officers will become immediately subject to Section 16(a) upon registration. In such cases, the standard Section 16(a) filing deadlines applicable to domestic issuers will apply, including the requirement that directors and officers file a Form 3 within 10 days after the effective date of the registration statement and file Form 4 two days after any transaction resulting in subsequent changes in beneficial ownership.

SEC Exemptive Authority for Similar Foreign Regimes
As briefly noted above, the HFIAA expressly grants the SEC broad authority to exempt insiders or any of their transactions from these reporting requirements if the FPI is subject to substantially similar foreign laws. Should the SEC determine that insider disclosure requirements promulgated by an FPI’s home country are essentially equivalent to Section 16(a) obligations, the SEC may exempt the issuer or their insider transactions to avoid duplicative compliance.

Other Considerations and Notes
Even though FPIs and their insiders remain subject to the general antifraud provisions and insider trading laws as before, FPIs should consider setting up systems designed to ensure that filing obligations are met on a timely basis in light of their compensation practices and approach to transaction management. For instance, directors and officers of FPIs will need to disclose the receipt of equity-based compensation and other awards reportable under Section 16(a), and the sale of such equity, whether it be on a discretionary basis, pursuant to a 10b5-1 plan or simple sale-to-cover transactions to cover tax obligations. Section 16(a) requires transaction disclosure within two business days of each transaction, creating a reporting obligation which may be novel to both the FPI and its directors and officers. These transactions are generally required to be reported on Form 4, as noted, the primary transaction-based filing under Section 16(a). Form 4 requires transaction-level detail, including the nature and date of the transaction, the number of securities involved, the price and the insider’s total ownership following the transaction. And as previously noted, all transactions not covered by Form 4 must be disclosed under Form 5 at the issuer’s fiscal year end.

HFIAA does not alter the previously applicable ongoing periodic reporting for foreign private issuers. FPIs must continue to file annual reports on Form 20-F and furnish current reports on Form 6-K, rather than filing Forms 10-K, 10-Q and 8-K, which are mandated for domestic issuers. Additionally, existing exemptions for FPIs under Section 14 of the Exchange Act relating to proxy solicitation and shareholder reports remain unchanged. However, to the extent that directors or officers fail to comply with applicable Section 16(a) filing requirements, FPIs may be required to disclose such delinquent filings in their Form 20-F, similar to the disclosure of Section 16(a) delinquencies required in Form 10-K. While the HFIAA does not create new penalties for noncompliance, the SEC retains its existing authority to impose civil penalties for delinquent Section 16(a) filings.

In summary, the HFIAA’s impact is relatively narrow in scope: it plugs a gap in U.S. disclosure requirements by bringing FPI insiders into the Section 16(a) reporting regime but does not otherwise overhaul FPI reporting obligations. FPIs continue to benefit from the tailored disclosure framework the SEC provides to foreign issuers, including Annual Reports on Form 20-F, Report of Foreign Private Issuer on Form 6-K, exemption from proxies, ability to use IFRS in lieu of GAAP, etc. However, it remains to be seen what additional rules and form updates the SEC will promulgate and finalize, and whether such rulemaking effort is only the beginning to strengthen oversight over foreign issuers accessing the U.S. public markets. The new legislation aligns with the policy concerns described in the SEC’s June 2025 Concept Release on Foreign Private Issuer Eligibility (which goes beyond the HFIAA), signaling a broader push on strengthening investor protections and exploring changes to the FPI regulatory framework.