Overview
On December 18, 2025, the Holding Foreign Insiders Accountable Act (the Act) was enacted as part of the 2026 National Defense Authorization Act.1
Effective March 18, 2026, the Act eliminates an exemption from the reporting requirements under Section 16(a) of the Securities Exchange Act of 1934, as amended, (the Exchange Act) for directors and officers of foreign private issuers (FPIs), thereby requiring these insiders to report their beneficial ownership in equity securities of FPIs as well as changes in their beneficial ownership of such securities beginning March 18, 2026. A FPI is generally a non-US issuer of securities which is listed on a US exchange such as Nasdaq or the NYSE, or which trades on OTC Markets, and is registered with the US Securities and Exchange Commission (the SEC). The Act will be effective March 18, 2026.
In Depth
Summary of changes
Section 16(a) of the Exchange Act requires certain filings by officers and directors of issuers with a class of equity securities registered under Section 12 of the Exchange Act and beneficial owners of more than 10% of any class of equity securities registered under Section 12 of the Exchange Act. FPIs have historically been exempt from this requirement under Rule 3(a)12-3(b) promulgated pursuant to the Exchange Act, which states that “Securities registered by a foreign private issuer […] shall be exempt from sections 14(a), 14(b), 14(c), 14(f) and 16 of the [Exchange] Act.”2
The Act revises the Exchange Act such that Section 16(a) of the Exchange Act now explicitly includes officers and directors of FPIs and eliminates portions of the exemptions previously included in Rule 3(a)12-3(b).3 The Act makes officers and directors of FPIs subject only to Section 16(a) of the Exchange Act and not the other subsections of Section 16. Most notably, officers and directors of FPIs remain exempt from Section 16(b)’s profit disgorgement rules.4 In effect, the primary impact of the Act to officers and directors of FPIs is to impose the Section 16(a) reporting regime. The Act preserves the existing exemption from Section 16 for greater than 10% beneficial owners of FPIs and changes only the reporting requirements applicable to officers and directors.
“Director” is understood to refer to any person who serves on the board of directors of an issuer or performs similar functions with respect to the issuer.5 “Officer” is defined as any president, principal financial officer, principal accounting office, or anyone who oversees a business unit or performs significant policy-making functions for the issuer. 6
Details and next steps
Section 16(a) provides for three filings by officers and directors of FPIs.7 Initial statements of beneficial ownership required under Section 16(a) are generally required to be filed on Form 3 within 10 days of becoming an officer or director.8 Changes of beneficial ownership of equity securities are generally required to be filed on Form 4 within 2 business days of the change 9 or, in certain cases, changes may be reported on Form 5. It is important to note that option and other grants by an issuer to an officer or director are generally reportable on Form 4 and as a result, director and officer compensation by FPIs may become more visible. There are numerous nuances in the reporting regime and advice of counsel is often required.
Officers and directors of FPIs may need to make an initial Form 3 filing for any preexisting holdings as early as March 18, 2026. 10 The Act only states that it becomes effective 90 days after execution, and does not provide a hard deadline for an initial filing. 11 On or before March 18, 2026, the SEC is required to publish additional compliance guidelines and implementing regulations for the Act. 12 Potentially affected officers and directors of FPIs should monitor related SEC pronouncements.
The Act contains one notable possible exemption to the new FPI filing requirements. At its discretion, the SEC may make exemptions where “laws of a foreign jurisdiction apply substantially similar requirements to such person, security, or transaction.” 13 The SEC may in its sole discretion, determine which foreign regimes are “substantially similar.” To date, no such guidance has been published.
The forms required under Section 16(a) must be filed electronically via the EDGAR Next online system. 14 Each officer and director must obtain EDGAR credentials in order to submit filings via EDGAR Next and in order to do so must file a Form ID with the SEC. 15 Once a Form ID is filed, obtaining EDGAR credentials can take a week or more. The EDGAR credentials must be obtained by the individual who is required to make the filing in their individual capacity, and individuals bear direct responsibility for any representations made in their filings. 16 It is common practice for issuers to assist officers and directors with Section 16 filings.
The Act does not include standalone provisions specifying penalties for violations. Violations of Section 16(a) are enforceable under the Exchange Act’s existing enforcement framework. The SEC has authority to impose civil fines and other penalties for failures to comply with insider reporting requirements.