On Dec. 18, 2025, President Donald Trump signed the National Defense Authorization Act for Fiscal Year 2026 (NDAA) into law. The NDAA includes Section 8103, the Holding Foreign Insiders Accountable Act (HFIAA), which abolishes certain of the current exemptions for securities of foreign private issuers (FPIs) from compliance with certain provisions of the Securities Exchange Act of 1934 (Exchange Act). The HFIAA takes aim specifically at the exemption from the reporting requirements under Section 16(a) of the Exchange Act, pursuant to which directors and officers of FPIs will be required to file insider beneficial ownership and transaction reports covering equity securities of that consistent with the current disclosure regime for U.S. domestic issuers. The new law will take effect March 18, 2026.
Application of Section 16 Under the HFIAA – Who Has to Report
The scope of the new law is limited— the HFIAA will require only directors and officers of FPIs to comply with Section 16(a) beneficial ownership reporting as described below. Holders of more than 10% of an FPI’s securities will remain exempt from Section 16(a) beneficial ownership reporting under current congressional language. In addition, directors and officers of FPI securities will continue to be exempt from Exchange Act Section 16(b) short‑swing profit disgorgement and Section 16(c) short‑sale prohibitions.
“Officer” for purposes of Section 16(a) is defined in Exchange Act Rule 16a-1(f) and includes “an issuer’s president, principal financial officer, principal accounting officer (or, if there is no such accounting officer, the controller), any vice-president of the issuer in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for the issuer.” In addition, officers of the issuer’s parent(s) or subsidiaries may be deemed officers of the issuer and subject to the reporting requirements if they perform policy-making functions for the issuer.
The concept of “director” has been interpreted broadly for purposes of Section 16(a). Under a “director-by-deputization” theory, a shareholder who has a representative on the FPI’s board of directors who serves to further the interests of the shareholder may be deemed to be a director and thereby subject to the new Section 16(a) reporting requirements. Case law over the years has relied upon a “totality of the circumstances” analysis in evaluating whether an individual director represents the interests of the shareholders.[1]
Reporting Obligations for FPI Directors and Officers
Initial insider beneficial ownership reports by directors and officers must be filed on Exchange Act Form 3, which must be filed within 10 calendar days after becoming an insider, appointment as a director or as an “officer” for Section 16 purposes, respectively. After filing the initial report, each subsequent equity transaction (purchases, sales, grants, inheritances, gifts, etc.) must be reported via Exchange Act Form 4 within two business days after the triggering event. There is no de minimis threshold for reporting; thus, every transaction will be subject to the same two-business-day filing requirement. In addition, an annual report on Form 5 of certain deferred transactions or corrections to prior reports must be filed within 45 days of the FPI’s fiscal year-end.
The foregoing forms must be filed electronically in English through the U.S. Securities and Exchange Commission’s (SEC) EDGAR Next system. Individual filers must have their own filing credentials and cannot rely on the issuer’s EDGAR Next codes. As a result, to the extent the subject director or officer does not already have EDGAR Next codes, each subject person will need to make a filing with the SEC on Form ID to obtain the necessary Central Index Key (CIK) and CIK Confirmation Code (CCC). Filers may wish to engage financial printers to assist with the process, given the need to comply with XML conversion requirements.
Failure to comply with Section 16(a) reporting obligations may lead to SEC enforcement action, as well as the imposition of civil/monetary penalties.
Implementation Timeline
The NDAA, including the HFIAA, becomes effective 90 days after Dec. 18, 2025. Thus, compliance will begin on March 18, 2026. The SEC has been mandated to adopt final implementing regulations within that 90-day period, which are expected to include applicable compliance dates for the initial filings on Form 3. The HFIAA empowers the SEC to use its exemptive authority in promulgating the implementing regulations, particularly where it considers that a foreign jurisdiction imposes substantially similar disclosure requirements under home country law. Clarity may be forthcoming on the mechanism for FPIs to pursue individual exemptions, as well as on the standards for “substantially similar.” In addition, the SEC may include provisions that require FPIs to disclose Section 16(a) delinquencies in their annual report on Form 20-F, consistent with the current requirements for domestic issuers.
Given the relatively short timeline to compliance, FPIs may need to determine covered persons and establish internal processes for coordinating the timely filings of the requisite Forms. In addition, review of existing insider trading policies and reporting procedures may be appropriate to ensure compatibility with and adherence to the new requirements.
Conclusion
The HFIAA marks a major change: for the first time, directors and officers of FPIs will be required under U.S. law to comply with Section 16(a). With an effective date of March 18, 2026, and a tight rulemaking deadline, FPIs may wish to promptly evaluate their insider disclosure systems, update their compliance infrastructure, identify required filers, obtain EDGAR Next filing codes, and engage with directors and officers on the changes to reporting requirements.
[1] See, for example, Feder v. Martin Marietta Corp., 406 F.2d 260 (2d Cir. 1969), cert. denied, 396 U.S. 1036 (1970); SEC Release Nos. 34-26333 (Dec. 2, 1988). See also Blau v. Lehman, 368 U.S. 403 (1962); SEC Release No. 34-18114 (Sep. 24, 1981).