SEC Grants Exemptive Relief From Section 16 Reporting To Canadian Issuers

On March 5, 2026, the US Securities and Exchange Commission (SEC) granted exemptive relief from Section 16 insider reporting to all directors and officers of Canadian issuers who report insider holdings on the System for Electronic Disclosure by Insiders (SEDI) pursuant to National Instrument 55-104 (NI 55-104). This order provides blanket relief to directors and officers of all SEC-reporting Canadian issuers who would have had to start reporting under Section 16 on March 18, 2026.

What you need to know

• On March 5, 2026, the SEC granted exemptive relief¹ from Section 16 insider reporting to all directors and officers of Canadian issuers who report insider holdings on SEDI pursuant to National Instrument 55-104 – Insider Reporting Requirements and Exemptions (supported by National Instrument 55-102 – System for Electronic Disclosure by Insiders (SEDI) and companion policies) (NI 55-104).
• The SEC order provides blanket relief to the directors and officers of all SEC-reporting foreign private issuers organized under the laws of a Canadian jurisdiction, provided they report insider holdings on SEDI pursuant to NI 55-104 (in addition to providing exemptive relief for certain other jurisdictions). Without this order, directors and officers of SEC-reporting Canadian issuers would have had to start reporting under Section 16 of the US Securities Exchange Act of 1934 (Exchange Act) beginning March 18, 2026, as required by the US Holding Foreign Insiders Accountable Act (HFIAA), which became law in December 2025.
• As indicated in the SEC order, there may remain exemptive relief opportunities for other jurisdictions that have "substantially similar" insider reporting requirements, pursuant to the express exemptive authority granted to the SEC under the HFIAA.

Under the existing Section 16 regime, directors, officers, and greater-than-10% shareholders of domestic SEC-reporting companies must comply with insider reporting requirements regarding their ownership of equity securities of the issuer, and are subject to potential liability for "short swing" profits under Section 16(b) of the Exchange Act. The SEC has long exempted foreign private issuers, including Canadian issuers relying on the multijurisdictional disclosure system (MJDS), from the requirements of Section 16 in an effort to accommodate home-country practices and facilitate cross-listings by non-US companies.

The SEC exemptive order marks the first exercise of the SEC's authority to grant relief to certain jurisdictions as contemplated by the HFIAA, and serves to restore the long-standing foreign private issuer exemption from Section 16 insider reporting for directors and officers of SEC-reporting issuers organized under the laws of a Canadian jurisdiction who report insider holdings on SEDI pursuant to NI 55-104.

Further details on the SEC order

The SEC order grants exemptive relief from Section 16 reporting to all directors and officers of any foreign private issuer organized in a "qualifying jurisdiction" and who is subject to a "qualifying regulation". Under the SEC order, qualifying jurisdictions are limited to Canada, Chile, the European Economic Area (EEA), the Republic of Korea, Switzerland, and the United Kingdom, and the qualifying regulations include the insider reporting regimes of each of those jurisdictions, including, in the case of Canada, NI 55-104.

The SEC order further explains that directors and officers of an issuer organized in any of the qualifying jurisdictions are exempt from Section 16 reporting as long as they are subject to any of the qualifying regulations, even if those are not the regulations of the applicable qualifying jurisdiction. For example, a director of a Canadian issuer that is subject to reporting under insider reporting regulations under Article 19 of the Market Abuse Regulation (MAR) in the United Kingdom or EEA would still be exempt from Section 16.

However, directors and officers of issuers organized under the laws of jurisdictions not on the list of "qualifying jurisdictions" in the SEC order are not eligible for a Section 16 exemption under the SEC order, even if they are otherwise subject to any of the "qualifying regulations". Accordingly, all directors and officers of SEC-reporting foreign private issuers organized in any jurisdiction not on the list of "qualifying jurisdictions" must begin reporting under Section 16 on March 18, 2026, unless and until further exemptive relief is granted.

Additionally, the SEC order is subject to the following conditions:

• Any director or officer, as defined in Section 3(a)(7) of the Exchange Act and Rule 16a-1(f) of the Exchange Act, respectively, seeking to rely on the exemption is required to report their transactions in the issuer's securities as set forth under the qualifying regulation to which they are subject. As indicated in the SEC order, this condition was imposed to ensure that any director or officer who does not fall within the defined category of reporting persons under the applicable qualifying regulation will still be required to file Section 16(a) reports.
• Any report filed pursuant to a qualifying regulation is made available in English to the general public within no more than two business days of its public posting.

Finally, the SEC order considered five areas in determining that the qualifying jurisdictions had "substantially similar" insider reporting requirements as those under Section 16:

1. the persons covered (i.e., directors and officers);
2. the securities covered (i.e., including equity and equity-derivative securities);
3. the transactions covered (i.e., including all transactions that would be indicative of a director or officer's opportunity to profit);
4. the disclosure of beneficial ownership, and changes in beneficial ownership, pursuant to reports that are required to be timely filed; and
5. the public availability of the reports in English.

These criteria may provide a roadmap for future orders exempting Section 16 reporting for foreign private issuers organized under the laws of other jurisdictions not covered by the SEC order.

Footnote

1 The SEC order is available here: https://www.sec.gov/files/rules/exorders/2026/34-104931.pdf (PDF).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.