New Law Extends Insider Reporting Requirements To Foreign Private Issuers

Summary

President Trump signed a law late last week that amends Section 16(a)(1) of the Securities Exchange Act of 1934, as amended, to subject foreign private issuers (FPIs) to the reporting requirements for directors, officers, and other insiders who trade or own stock of the companies they manage.

The Upshot

• Directors, officers, and major shareholders of foreign private issuers (FPIs)—companies incorporated outside the United States that meet certain ownership and related criteria under SEC rules—who list equities on U.S. exchanges will soon have to report more information about trades, ownership, and compensation in the stock of companies they manage.
• There may be increased scrutiny on such trades by the SEC, which conducted a sweep of violations of Section 16 among U.S. companies in 2024, and has recently demonstrated interest in amending regulations for Foreign Private Issuers.
• This signals increased interest from Congress in strengthening regulation of non-U.S. companies with a presence in the U.S. markets.

The Bottom Line

FPIs and their officers, directors, and major shareholders should prepare for these new reporting requirements before the law takes effect, expected during Q1 next year. They should consider who within the company constitutes a Section 16 insider and have compliance systems in place for timely reporting.

What does the amendment require?

Under Section 16(a) of the Securities Exchange Act of 1934, as amended, corporate directors, officers, and any person who beneficially owns more than 10% of any registered class of a company's equity securities, collectively referred to as "insiders," must publicly report transactions in company securities, including stock grants as compensation. Until now, foreign private issuers (FPIs) were not subject to these reporting requirements, unless regulations from their home countries provided otherwise.

Now that's changed. Deep within the 2026 National Defense Authorization Act, which the President signed on December 18, 2025, Congress included the Holding Foreign Insiders Accountable Act (HFIAA), which extends Section 16(a)(1) reporting requirements to FPIs. In support of the HFIAA, Chris Van Hollen (D-Maryland) and John Kennedy (R-Louisiana) stated in a press release that "insiders at companies in Beijing and Moscow have been able to avoid billions in losses on the U.S. stock exchange by playing by a different set of rules than Americans do." The HFIAA purports to address this disparity in disclosure requirements between American and foreign issuers.

Specifically, corporate insiders at FPIs now have the following reporting obligations:

• Initial Reporting Obligations—Insiders must report holdings in company stock on SEC Form 3 either on the day the company goes public or, if the company was already public, within 10 days of becoming an insider.
• Transaction Reporting Obligations—Insiders must also report on SEC Form 4 most transactions in company equities, including gifts, compensation grants, or sales within two days of the transaction.
• Annual Reporting Obligations—Insiders must also report annually on SEC Form 5 certain other transactions not otherwise reported on SEC Forms 3 and 4, within 45 days of the end of the company's fiscal year.

Importantly, such insiders of FPIs are not required to disgorge short-swing profits from insider trades under Section 16(b) and are not subject to the restriction on short selling in Section 16(c).

What are the enforcement implications for FPIs?

The SEC is tasked with enforcing the HFIAA, and the new law is consistent with the SEC's focus on traditional enforcement areas, such as insider trading laws. We expect that the SEC may prioritize enforcing Section 16(a) violations by FPIs, as the SEC conducted a similar sweep of such violations against U.S. insiders and companies in 2023 and 2024. The 2023 sweep resulted in 11 actions against five individuals and six companies, leading to civil penalties of $1,569,000, and the 2024 resulted in 23 actions against 13 entities and 10 individuals, leading to civil penalties of $3,866,000. Thus, FPIs and their insiders should be careful to assess their disclosure requirements under the amendment. While the prior SEC orders were limited to civil monetary penalties, the Commission has authority to pursue broad equitable remedies, including disgorgement of profits, industry bars, and director and officer bars, which could have long-term professional and reputational implications for insiders.

The HFIAA is also consistent with the SEC's interest in tightening the requirements for entities to qualify as an FPI. For example, earlier this year, the SEC issued a "Concept Release" soliciting comments on tightening the requirements to qualify as an FPI. The SEC issued the Concept Release based on the increase in FPIs from countries with fewer reporting requirements that primarily trade on U.S. markets rather than in their home countries.

How should FPIs prepare for the new reporting requirements?

The HFIAA is set to take effect on March 18, 2026, 90 days from the date of signing, although its enforcement may be delayed subject to the timeline of the Commission's rulemaking process. Insiders should prepare for these new reporting requirements before the law takes effect. They should consider who within the company constitutes a Section 16 insider and have compliance systems in place for timely reporting. They should also consider whether they should seek exemptions from the reporting requirements, as the HFIAA gives the SEC authority to consider exemptions for FPIs whose home jurisdictions have "substantially similar requirements."

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