Holding Foreign Insiders Accountable Act Subjects Officers and Directors of Foreign Private Issuers to Section 16 Reporting Requirements

On December 18, 2025, the President signed the fiscal 2026 National Defense Authorization Act (the Act) into law. The Act includes as Section 8103 the Holding Foreign Insiders Accountable Act (HFIAA), which amends Section 16(a)(1) of the Securities Exchange Act of 1934 (Exchange Act) to require officers and directors¹ of a foreign private issuer with equity securities registered under Section 12 of the Exchange Act (FPIs) to report their holdings of, and transactions in, the equity securities of that FPI in substantially the same manner as officers and directors of domestic issuers. Officers and directors of FPIs were for many years exempt from these reporting requirements under Exchange Act Rule 3a12-3. They remain exempt from the short-swing profit recovery provisions and short-sale prohibitions of Exchange Act Sections 16(b) and (c), and 10% beneficial owners of an FPI’s securities (that are neither officers nor directors) were, and remain, exempt from all of Section 16’s requirements. The HFIAA becomes effective on March 18, 2026, and the U.S. Securities and Exchange Commission (SEC) must issue final regulations (or amend existing regulations) to carry out the foregoing amendment by such date.

Ownership Reports (Forms 3, 4, and 5)

Existing officers and directors of FPIs will be required to file an initial report on Form 3 with the SEC on March 18, 2026, disclosing all equity securities of such FPI beneficially owned by such person. Any person who becomes a director or officer of an FPI after March 18, 2026 must file a Form 3 within 10 days after assuming that position; and an officer or director of an FPI registering securities for the first time under Section 12 of the Exchange Act must file a Form 3 no later than the effective date of the registration statement. A Form 3 must be filed even if no securities are beneficially owned on the date of filing. Any subsequent change in beneficial ownership must be reported on a Form 4 filed with the SEC by the second business day following the transaction, unless the transaction is exempt from reporting or is eligible for deferred reporting on Form 5 (which is due no later than 45 days after the end of the year). All Section 16 reports must be filed with the SEC electronically using EDGAR Next by 10:00 p.m. Washington, D.C. time on the due date and will become publicly available immediately. To file these reports, each insider must have individual SEC filing codes, obtained by filing a Form ID with the SEC. FPIs may submit Section 16 forms on behalf of their officers and directors if the officer or director designates the FPI (or its agent) as an authorized account administrator or user.

Reportable Transactions

Absent an exemption, all changes in beneficial ownership (not only open market sales and purchases) must be reported on Form 4. Moreover, a person who has ceased to be a director or officer must report any non-exempt purchase or sale that occurs after termination of service if the transaction occurs within less than six months of an opposite-way, non-exempt sale or purchase that took place while the person was a director or officer (e.g., a non-exempt sale will be reportable if it occurs less than six months after a non-exempt purchase that occurred prior to termination of service).

Reporting under Section 16(a) applies not only to transactions in common stock, but also to acquisitions and dispositions of “derivative securities.” The term “derivative securities” includes options, warrants, convertible securities, stock appreciation rights, share units, and similar instruments.

Officers

Under Exchange Act Rule 16a-1(f), the term “officer” means an issuer’s “president, principal financial officer, principal accounting officer (or, if there is no such accounting officer, the controller), any vice-president of the issuer in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for the issuer. Officers of the issuer’s parent(s) or subsidiaries shall be deemed officers of the issuer if they perform such policy-making functions for the issuer. In addition, when the issuer is a limited partnership, officers or employees of the general partner(s) who perform policy-making functions for the limited partnership are deemed officers of the limited partnership. When the issuer is a trust, officers or employees of the trustee(s) who perform policy-making functions for the trust are deemed officers of the trust.”

Exemptive Authority

Under the HFIAA, the SEC has been granted discretionary authority to exempt FPI insiders from Section 16(a) reporting requirements where foreign law imposes “substantially similar” obligations, but it is not obligated to do so. 

© Arnold & Porter Kaye Scholer LLP 2025 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.