Officers and directors of U.S. listed companies that qualify as foreign private issuers (FPIs) will soon be required to publicly file Section 16 reports of their positions and trades in their company’s securities. This new requirement results from Congress’ passage of the 2026 National Defense Authorization Act (the NDAA) on December 17, 2025. In section 8103 of the NDAA, Congress amended Section 16(a) of the Securities Exchange Act of 1934 (the Exchange Act) and directed the U.S. Securities and Exchange Commission (SEC) to implement the new requirement within 90 days of the President signing the NDAA. This new requirement alters longstanding SEC policy, and raises complicated implementation questions and profound policy issues.
Exchange Act Section 16(a) requires officers, directors and 10% beneficial owners of a public company’s equity securities to file Form 3, Form 4 and Form 5 reports of their holdings of and transactions in company securities. On its face, the provision already applies to the insiders of all companies with a class of equity securities registered under Section 12 of the Exchange Act. For decades, however, the SEC has exempted FPIs[1] from this and other provisions of the Exchange Act. Exemption from Section 16 reporting has long been one of the more attractive features of qualifying as a FPI for foreign companies looking to list in the United States.
Section 8103 of the NDAA was sponsored by Senators Kennedy and VanHollen, who had previously introduced versions of this bill. The bipartisan sponsors expressed concern that foreign company insiders were trading in their company’s securities on the basis of material nonpublic information with impunity.[2]
Although the objective of these new requirements is relatively straightforward, there are a number of implementation questions that the SEC will need to address. The NDAA directs the SEC to adopt “final regulations” implementing the changes within 90 days of enactment. The current exemption for officers and directors of FPIs in Exchange Act Rule 3a12-3(b) from Section 16 would need to be amended. The answers to other questions are less certain.
Who is covered by these new requirements? – The NDAA specifically refers only to “officers and directors” of FPIs. Section 16(a) also applies to 10% owners. Indeed, the SEC’s current exemption applies to officers, directors and 10% owners. The SEC will have to decide whether to remove the current exemption for all insiders or just officers and directors. Extending the new requirements to 10% owners of FPIs would likely make listing in the United States even less desirable for controlling shareholders.
When will officers and directors of listed FPIs need to begin filing Forms 3, 4 and 5? – The NDAA amends Section 16 to require FPI officers and directors to file their reports within 90 days of enactment.[3] Section 16 and the SEC’s current rules have a somewhat complicated rhythm for Section 16 reporting. Generally, there are initial holding reports on Form 3, due within 10 days of becoming an insider; transaction reports on Form 4, due two business days after the transaction; and, when applicable, an annual “catch-up”/summary report on Form 5, due after the end of the company’s fiscal year. It seems likely the SEC will interpret the timing language in the NDAA as the initial implementation date for Forms 3, but the language is ambiguous, and the SEC may provide a longer on-ramp.
Will FPI officers and directors be subject to Section 16(b) short swing profit recovery? The NDAA only makes changes to Section 16(a), which contains the reporting requirements. Section 16 has other provisions – notably subsection (b) which provides for recovery of short swing profits insiders make by trading within a six month window and subsection (c) which prohibits insiders from selling company securities short. Neither subsection distinguishes between domestic and foreign private issuers, but the longstanding SEC rule has exempted FPIs from all three subsections of Section 16. It is not yet clear whether the SEC will retain the exemption from Sections 16(b) and 16(c).
Could EDGAR Next further complicate implementation? – Last year, the SEC changed the rules for how companies and reporting persons – including Section 16 insiders – interact with the SEC’s Electronic Data, Gathering, Analysis and Retrieval (EDGAR) system, known as EDGAR Next.[4] For filers already subject to a reporting obligation, the changes have been fully implemented, but not without some challenges. The process of signing up for “EDGAR codes” and coordinating the filing obligations of directors at multiple companies have created the most nettlesome implementation issues. Adding a new cohort of filers within a narrow window may delay compliance.
How the SEC makes these changes is likely to affect the equity holding and trading practices of FPI insiders and the compensation practices of FPIs. If the changes deter FPIs from listing in the United States, the effect on the U.S capital markets could be more profound. This new policy complicates the SEC’s efforts to analyze and potentially recalibrate the test for FPI status – including whether a separate status for FPIs still makes sense.[5] And, at a time when the SEC is trying to “Make IPOs Great Again,”[6] some foreign companies may reconsider whether to raise capital and list in the U.S. at all.
Next Steps
While FPIs await implementation guidance from the SEC, they may consider taking the following steps, to stay ahead of the curve:
- Identify “executive officers,” if they have not previously done so.
- Ensure each director and executive officer has EDGAR access codes.
- Review insider trading policies to determine whether transfers of the FPI’s stock by directors and executive officers are subject to pre-clearance in order to facilitate timely reporting of transactions.
- Consider training directors and executive officers on their new filing obligations. These efforts will be even more important if the SEC extends short swing profit liability to directors and executive officers of FPIs.
- If the company agrees to make Section 16 filings for its directors and executive officers, determine whether it has sufficient controls and procedures in place to ensure the timely filing of beneficial ownership reports. These policies and procedures should be designed to detect potential short swing liability issues, if the SEC extends Section 16(b) to directors and officers of FPIs.
- Consider engagement with the SEC staff on any implementation challenges.
[1] “Foreign Private Issuer” is defined in Exchange Act Rule 3b-4(c). Generally, the FPI test focuses on a combination of where a majority of the securities holders, executive officers or directors, company assets, and corporate headquarters are.
[2] Foreign Companies Should Have to Play by the Same Rules, Wall Street Journal (Apr. 16, 2023).
[3] Section 8103(b)(1) of the NDAA amends Section 16(a)(2) to provide that “The statements required by this subsection shall be filed—…(D) with respect to a foreign private issuer, the securities of which are, as of the date of enactment of the Holding Foreign Insiders Accountable Act, registered pursuant to subsection (b) or (g) of section 12, on the date that is 90 days after that date of enactment.’’ Without explanation, Section 8103(b)(2) provides a separate “Effective Date,” also 90 days after enactment.
[5] Concept Release on Foreign Private Issuer Eligibility, Rel. No. 33-11376 (June 4, 2025).
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