New Section 16 Rules Take Effect March 18, 2026
In a landmark shift for global securities regulation, the SEC is closing a longstanding regulatory gap. For the first time, directors and officers of Foreign Private Issuers (FPIs) will be subject to the same insider trading disclosure requirements as their U.S. counterparts under Section 16(a) of the Securities Exchange Act of 1934. The new rules take effect March 18, 2026, and carry significant compliance implications for FPIs listed on U.S. exchanges.
This change, driven by the Holding Foreign Insiders Accountable Act (HFIAA), was signed into law on December 18, 2025, as part of the National Defense Authorization Act for Fiscal Year 2026. The legislation eliminates a decades-old exemption for FPI insiders, ushering in a new era of transparency and accountability.
Who Is Affected
Directors and Officers: All directors and officers of FPIs with equity securities registered with the SEC or listed on U.S. exchanges (e.g., NASDAQ or NYSE) must now comply with Section 16(a) reporting obligations.
Important Exemption: Unlike domestic issuers, 10% beneficial owners of FPIs remain exempt from Section 16(a) reporting under the current statute.
New Reporting Obligations
Form 3: Initial Statement of Beneficial Ownership
- Current insiders as of March 18, 2026 must file Form 3 on that date, even if they do not hold any securities.
- New insiders after that date must file within 10 calendar days of appointment.
Form 4: Changes in Ownership
- Must be filed within two business days of any reportable transaction, including open market trades, gifts, equity vesting, and option exercises.
- This tight turnaround demands precise internal tracking and communication systems.
Form 5: Annual Statement
- Due within 45 days after fiscal year-end to capture any transactions not previously reported.
What’s NOT Included (Yet)
- Section 16(b) Short-Swing Profit Rules: Currently, FPI insiders are not subject to six-month short-swing profit disgorgement.
- Section 16(c) Short-Sale Restrictions: Short-sale prohibitions do not automatically apply to FPI insiders at this time.
- Potential Exemptions: While Congress authorized the SEC to provide exemptions based on substantially similar foreign regimes, no such exemptions exist as of January 2026.
Critical Implementation Requirements
EDGAR Next Credentials: FPI insiders must obtain EDGAR Next credentials to file Forms 3, 4, and 5 electronically. Most have never filed on EDGAR and will need time to establish access.
Internal Reporting Protocols: FPIs must determine who qualifies as a Section 16 officer under Rule 16a-1(f) and create systems for real-time notification of insider transactions. The two-day filing requirement for Form 4 leaves little room for error.
Officer Definition: Includes the president, principal financial officer, principal accounting officer, any VP heading a principal business unit, and others with significant policy-making roles.
Key Deadlines
- December 18, 2025: HFIAA signed into law
- March 18, 2026: Section 16(a) reporting requirements go into effect
- March 18, 2026: Form 3 due for all current FPI directors and officers
- Ongoing: Form 4 due within 2 business days of reportable activity
- Annually: Form 5 due 45 days after fiscal year-end
Rule 144 Considerations
Section 16 reporting and Rule 144 operate independently but may overlap. FPI affiliates selling restricted securities under Rule 144 may also need to file Form 144. The SEC is considering amendments to require electronic Form 144 filings, consistent with its EDGAR Next initiative.
Strategic Implications for Foreign Private Issuers
Enhanced Transparency: U.S. investors will gain real-time insight into insider activity at FPIs, aligning these disclosures with domestic standards.
Operational Complexity: Compliance will require investment in technology, legal review, and real-time communication systems, especially given the accelerated Form 4 timeline.
Cross-Border Coordination: Many insiders reside and trade abroad, increasing the challenge of timely notification across jurisdictions.
Governance Overhaul: Boards must revisit insider trading policies, establish blackout periods, and train insiders on their new responsibilities.
Key Differences Remain
- SEC may issue exemptions, but none have been formalized
- 10% beneficial owners of FPIs are still exempt
- No short-swing profit or short-sale restrictions apply—yet
What FPIs Must Do Now
- Identify Covered Insiders: Map out directors and officers qualifying under Rule 16a-1(f).
- Secure EDGAR Access: Begin registration for EDGAR Next credentials—this process can take weeks.
- Build Reporting Infrastructure: Set up notification and tracking systems to ensure timely Form 4 filings.
- Revise Policies: Update insider trading policies to reflect new rules and responsibilities.
- Train Insiders: Conduct internal education on deadlines, procedures, and legal risk.
- Consult Legal Counsel: Tailor your compliance strategy to company-specific operations and structures.
- Monitor SEC Updates: Stay alert for exemptive relief or rule changes that may affect obligations.
Conclusion
This regulatory shift marks a pivotal moment for foreign issuers in the U.S. market. With the March 18, 2026 deadline fast approaching, the time to act is now. FPIs must not only understand the new rules but implement robust systems to manage the ongoing demands of insider reporting.
Delays or missteps could result in public scrutiny, enforcement risk, or reputational harm. For a seamless transition, FPIs should consider working with a partner experienced in U.S. securities compliance.At Infinite Equity, we offer end-to-end support, from readiness assessments and EDGAR management to policy development and real-time monitoring. Don’t let compliance challenges become liabilities. Contact us today to get started.
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