On February 27, 2026, the Securities and Exchange Commission (the SEC) adopted final rules to enact the requirements of the Holding Foreign Insiders Accountable Act (HFIA Act). These final rules, which mark a significant change in the reporting obligations applicable to Foreign Private Issuers (FPIs), aim to enhance transparency into the holdings and transactions of directors and officers of these entities, closer aligning with the requirements applicable to domestic issuers. FPIs should, however, keep apprised of additional exemptive orders from the SEC, which provide relief for certain foreign issuers from specifically recognized jurisdictions with comparable disclosure regimes for directors and officers. Most notably, and as set forth in more detail below, as of March 5, 2026, an SEC exemptive order provides relief from these reporting requirements for FPI insiders where the FPI is (i) incorporated or organized in a qualifying jurisdiction and (ii) subject to similar qualifying regulations in a qualifying jurisdiction.  For the purposes of this exemptive order, “qualifying jurisdiction” means Canada, Chile, the European Economic Area, the Republic of Korea, Switzerland, and the United Kingdom.

Section 16(a) Reporting Requirements for FPIs

FPIs are entities incorporated or organized in a non-U.S. country that meet certain thresholds for ownership of voting securities by U.S. residents, along with meeting criteria with respect to U.S.-based management, assets, and business activities. Prior to the HFIA Act, FPIs were exempt from Section 16 of the Securities Exchange Act of 1934, as amended (the Exchange Act).

Under the HFIA Act, this exemption is repealed with respect to Section 16(a) of the Exchange Act, which otherwise requires directors, officers, and 10% holders of any class of an issuer’s equity securities registered under Section 12 of the Exchange Act to report their holdings and transactions in such equity securities on Forms 3, 4, or 5 (each, a Section 16 report), as applicable. In accordance with the HFIA Act, the final rules obligate directors and officers (though, notably, not 10% holders) of FPIs to file Section 16 reports. As of the date of this alert, the final rules do not provide a mechanism for disclosure of delinquent Section 16 reports for FPI insiders comparable to Item 405 of Regulation S-K, which applies to domestic issuers. It is possible, however, in the future that the SEC could implement a similar disclosure requirement under Form 20-F, for example.

FPI insiders remain exempt under SEC rules from the short-swing liability provisions of Section 16(b) of the Exchange Act and the short sale restrictions in Section 16(c) of the Exchange Act.

In its final rule, the SEC notes that “the information currently available to investors and other market participants regarding the trading and beneficial ownership positions of FPI directors and officers is limited” and “[a]s a result, investors cannot currently use such information when valuing an FPI’s shares.” The new rule’s disclosures are meant to provide “greater transparency to investors and decrease information asymmetries between FPI directors and officers and outside investors about the directors’ and officers’ trading and beneficial ownership positions, enabling more informed decisions about whether to invest in the FPI’s shares and at what valuation.” The SEC posits that the increase in information about the holdings and trading activities of FPI officers and directors “may result in more efficient capital allocation and more informationally efficient pricing.”

Considerations for FPIs with a Two-Tier Board Structure

As the SEC notes in the final rules, some FPIs utilize a two-tier board structure that delineates between a supervisory (non-management) board and a management board. As it relates to FPIs with these board structures navigating Section 16(a), the SEC directs attention to the definition of “director” under Section 3(a)(7) of the Exchange Act, which provides that this term refers to any director of a corporation or any person providing similar functions with respect to an organization, incorporated or otherwise. As such, FPIs must determine whether a person qualifies as a “director” for purposes of filing Section 16 reports based on the facts and circumstances of any particular situation.

Exemptive Relief

Section 16(a)(5) of the Exchange Act, as provided by the HFIA Act, allows the SEC to conditionally or unconditionally exempt certain persons, securities, or transactions from the filing requirements of Section 16(a) if the SEC determines that foreign laws in the applicable jurisdiction apply substantially similar requirements.

In its exemptive order, dated March 5, 2026, the SEC granted relief to directors and officers of FPIs incorporated or organized in “qualifying jurisdictions” that publicly file disclosures similar to Section 16(a) of the Exchange Act in (a) that same jurisdiction of incorporation or organization, or (b) in another qualifying jurisdiction.

The qualifying jurisdictions listed in the March 5, 2026, exemptive order are Canada, Chile, the European Economic Area, the Republic of Korea, Switzerland, and the United Kingdom (collectively, the Exempt Jurisdictions). For example, the directors and officers of an FPI incorporated or organized under Canadian provincial law are exempt from filing Section 16 reports if they are subject to the substantially similar disclosure requirements set forth under either (a) Canadian laws or (b) the laws of any other of the Exempt Jurisdictions.

Technical Updates

In connection with the final rules, the SEC adopted changes to Forms 3, 4, and 5 to accommodate filings by the directors and officers of FPIs. Among other technical updates, the word “Zip” has been removed and replaced with “Zip/Postal Code” and “Country,” along with the addition of a new “Foreign Trading Symbol” data field box.

Next Steps for FPIs before March 18, 2026

As noted in our prior alert, when the HFIA Act was signed into law, directors and officers of FPIs must begin disclosing their holdings and transactions on March 18, 2026. With this effective date looming, management of FPIs that are not exempt from filing Section 16 reports should consult with legal counsel and enact certain key preparational steps as soon as possible:

• Identify required filers;
• Complete Form ID applications for insiders and enroll in EDGAR Next, the SEC’s filing system for securities filings, including Section 16 reports;
• Obtain powers of attorney from insiders covering every person designated to file Section 16 reports on their behalf;
• Calculate beneficial ownership of company shares held by insiders;
• Establish policies and procedures for tracking beneficial ownership of company securities for insiders and for filing Section 16 reports, including review of compensation plans and equity award agreements for upcoming events;
• Update insider trading or similar policies to reflect the new reporting requirements and implement pre-clearance procedures for transactions by insiders; and
• Continue monitoring for exemptive relief from the SEC.

Time is short to ensure the proper mechanisms are in place for a smooth transition to Section 16(a) compliance for non-exempt FPI insiders. Cozen O’Connor stands ready to provide advice and assist FPIs in this process.