Executive Summary
Until recently, directors and officers of foreign private issuers (“FPIs”) were exempt from insider reporting regime under Section 16(a) of the U.S. Securities Exchange Act of 1934 (the “Exchange Act”).
Recent U.S. legislation extends such insider reporting regime to directors and officers of FPIs, pursuant to which, effective as of March 18, 2026, directors and officers of FPIs will be required:
- to report initial beneficial ownership on Form 3;
- report most changes in beneficial ownership on Form 4 within two business days; and
- make annual catch‑up filings on Form 5, using the SEC’s EDGAR system.
The new regime does not extend Section 16(a) reporting to 10% shareholders of FPIs and preserves the longstanding exemption of FPI insiders from Section 16(b) short‑swing profit liability.
Companies and insiders should prepare for compliance now, including identifying directors and officers, collecting holdings and transaction data, and obtaining EDGAR Next filing credentials ahead of an expected processing backlog.
Background, scope, and legislative development
In general, directors and officers must file on Form 3 an initial statement of all beneficially owned equity securities and derivatives of the issuer, followed by Form 4 to report most changes in beneficial ownership within two business days, and Form 5 for certain year‑end items not reportable on Form 4 or to cure prior omissions. Virtually any change in beneficial ownership, however small, triggers Form 4, including compensatory events (grants, vesting and settlement, option exercises, and tax or exercise‑price share withholding) and non‑compensatory events (market purchases and sales, gifts, margin loan foreclosures, and receipt of share dividends or dividend equivalents). Transactions effected pursuant to a Rule 10b5‑1 plan are also reportable and must be flagged as such on Form 4.
Historically, FPIs and their insiders were exempt from Section 16 of the Exchange Act and thus were subject primarily to home‑country requirements and the ownership disclosures in Form 20‑F. The “Holding Foreign Insiders Accountable Act,” enacted as part of the U.S. defense spending bill and signed on December 18, 2025, amends Section 16(a) to include, for these purposes, every person who is a director or officer of an FPI, thereby extending insider reporting to FPI directors and officers, effective as of March 18, 2026.
The amended rule requires directors and officers to file statements at the abovementioned effective date and regularly at three junctures:
- at the FPI’s initial listing;
- within 10 calendar days after first becoming a director or officer; and
- following any change in beneficial ownership no later than the end of the second business day after execution.
The SEC may, by rule, regulation, or order, exempt persons, securities, or transactions if foreign laws impose substantially similar requirements, but no process or timeline has been announced.
What is not changing
The amendments do not extend Section 16(a) reporting to beneficial owners of more than 10% of an FPI’s registered equity; however, significant holders remain subject to beneficial ownership-based filings such as Sections 13(d) (filed by active investors), 13(g) (filed by passive investors), and 13(f) (institutional investors holdings filing), as applicable, and Form 20‑F ownership disclosures. Section 16(b)’s short‑swing profit disgorgement and Section 16(c)’s short‑sale prohibitions continue not to apply to FPI insiders.
Timing and initial compliance
Existing directors and officers of FPIs must file initial Forms 3 by March 18, 2026. After that date, a newly appointed director or officer must file a Form 3 within 10 calendar days of assuming the role, and any change in beneficial ownership must be reported on Form 4 no later than two business days after execution, with Form 5 due 45 days after fiscal year‑end for eligible items. For FPIs listing after March 18, 2026, initial Forms 3 are due on the listing date, generally when the Section 12 registration statement becomes effective.
Although the SEC is authorized to issue regulations, issuers and insiders should assume compliance is required on the statutory effective date and plan accordingly. Obtaining EDGAR Next access (via Form ID) can take several weeks and requires notarization and identity verification, and lost credentials or non‑enrollment in EDGAR Next may require re‑filing. Given the influx of newly in‑scope filers, processing delays are possible.
Operational readiness and allocation of responsibility
Although filing obligations under Section 16 attach to the individual insider, U.S. market practice is for issuers to facilitate compliance, including preparing and submitting filings, coordinating with financial printers, and monitoring insider trading policies. FPIs should adopt or update controls and procedures to identify directors and officers, capture reportable transactions across markets, and ensure timely EDGAR submission, recognizing that changes in beneficial ownership can arise from complex instruments, employee plans, indirect holdings, and family or trust arrangements.
Directors and officers will need EDGAR Next credentials; any authorized third‑party agent must be granted EDGAR Next access to file on the insider’s behalf. FPIs should also revisit insider trading policies to mandate prompt internal notification of trades by directors and officers in order to meet the two‑business‑day Form 4 deadline.
Practical implications and next steps for FPIs
For our FPI clients, we recommend assuring EDGAR Next onboarding for each insider, including obtaining or refreshing Form ID credentials and granting access to in‑house teams and printers, anticipating processing times and potential backlog.
Second, implement Section 16 controls: pre‑clearance and notification protocols tailored to two‑day Form 4 deadlines; centralized data capture of all equity and derivative transactions, including on non‑U.S. exchanges and in both ADSs and underlying shares; and calendaring of Form 5 obligations.
Third, review remuneration and equity award processes to ensure that grants, vesting, exercises, and tax‑withholding events are identified and reported in real time; confirm proper 10b5‑1 designations on Form 4 where relevant.
Shibolet & Co.’s U.S. Capital Markets practice is available to support clients in scoping the relevant directors and officers, designing and implementing effective Section 16 compliance programs, coordinating EDGAR Next onboarding, and harmonizing insider trading and disclosure policies with the new regime.
For further information or assistance in assessing your company’s reporting obligations, please do not hesitate to contact our team.
This client update is provided for general informational purposes only and does not constitute legal advice. Readers should seek specific legal counsel before acting on any information contained herein.
