SEC Requires Ownership and Trading Disclosure from Foreign Private Issuers

The SEC adopted amendments to its rules requiring directors and officers of "foreign private issuers" ("FPIs") to disclose their beneficial ownership of, and transactions in, the issuer’s equity securities.

The amendments implement the Holding Foreign Insiders Accountable Act ("HFIA Act"). The rule requires directors and officers of a foreign private issuer with a class of equity securities registered under Section 12 ("Registration requirements for securities") of the Exchange Act to file Section 16(a) ("Directors, officers, and principal stockholders") disclosures.

The SEC highlighted amendments to: 

• Rule 3a12-3(b) ("Exemptions for securities of certain foreign issuers") that remove the exemption that previously relieved FPI directors and officers from Section 16 reporting obligations. Under the revised rule, these insiders must comply with Section 16(a) reporting requirements, though they remain exempt from the short-swing profit provisions of Section 16(b) and short sale prohibitions of Section 16(c). 
• Rule 16a-2 ("Persons and transactions subject to section 16") to explicitly exclude beneficial owners of more than 10 percent of an FPI’s equity securities from Section 16(a) reporting requirements. This change clarifies that the HFIA Act’s mandate applies solely to directors and officers, not principal stockholders of foreign private issuers.
• General Instructions for Forms 3, 4, and 5 to include directors and officers of FPIs as persons required to file these reports. The amendments also updated the instructions to specifically exclude "10 percent holders" of FPIs from the filing obligation. 

The SEC stated that the revisions were necessary to decrease "information asymmetries" between FPI directors and officers and outside investors. The SEC acknowledged that the new reporting framework will impose direct "legal and compliance-related" costs and could subject insiders to additional market scrutiny, but concluded that the added transparency would deter trading based on "material nonpublic information" and increase "investor confidence" in the markets.

The amendments will become effective on March 18, 2026.

In separate statements, SEC Chair Paul Atkins highlighted that the changes align foreign executive reporting obligations with those of U.S. executives. He also stated that SEC staff is actively evaluating whether to recommend exercising the SEC’s exemptive authority where foreign laws impose substantially similar requirements. SEC Commissioner Mark Uyeda emphasized that the SEC appropriately adhered to the plain text of the statute rather than adopting an expansive interpretation. He contrasted this approach with prior rulemakings, such as the clawback rules, where he suggested the Commission likely exceeded its Congressional mandate.