On December 18, 2025, President Donald Trump signed the National Defense Authorization Act for Fiscal Year 2026 (the NDAA), which includes significant new reporting obligations for directors and officers of Foreign Private Issuers (FPIs). The legislation, known as the Holding Foreign Insiders Accountable Act (HFIAA), mandates that these company insiders comply with Section 16 of the U.S. Securities Exchange Act of 1934, marking a notable change in regulatory practices.
Historically, efforts to enforce similar reporting requirements on FPIs have been introduced but failed to gain traction. The HFIAA’s journey began with a proposal from Senator John Kennedy in May 2022, which was later reintroduced in April 2023, following reports that investors were able to mitigate losses through strategic stock sales prior to declines. Despite previous attempts, including a reintroduction by Kennedy and Senator Chris Van Hollen in March 2025, the HFIAA has now become law.
Understanding Section 16 Reporting Requirements
Under Section 16(a) of the Securities Act of 1934, insiders, defined as directors, officers, and individuals owning more than 10 percent of a company’s equity securities, are required to publicly disclose their ownership and transactions concerning the company’s securities. The filings must be made using Forms 3, 4, and 5, each serving distinct purposes.
– **Form 3**: This initial statement must be filed within 10 calendar days of becoming an insider or on the same day a registration statement becomes effective for existing insiders.
– **Form 4**: Insider ownership changes must be reported on Form 4 by the end of the second business day following a transaction, such as buying or selling securities or exercising options.
– **Form 5**: This form is due within 45 days after a company’s fiscal year-end and is needed if an insider failed to file Form 3 or Form 4 or engaged in exempt transactions.
The HFIAA stipulates that FPIs whose securities are registered under Section 12 of the Exchange Act will begin making these filings on March 18, 2026, exactly 90 days after the NDAA’s enactment. Notably, the HFIAA does not impose all provisions of Section 16 on FPIs, particularly the short-swing profit disgorgement rules, which require insiders to return profits earned from transactions within six months.
Implications for Foreign Private Issuers
While the HFIAA introduces new obligations, it does not extend the reporting requirements to individuals beneficially owning over 10 percent of an FPI’s registered securities. Additionally, FPIs remain exempt from certain U.S. Securities and Exchange Commission (SEC) rules concerning proxy statements, including disclosures about any filing delinquencies.
Despite these exemptions, directors and officers of FPIs could face SEC enforcement actions and fines for any reporting failures under the HFIAA. The legislation also grants the SEC discretionary authority to exempt certain persons or transactions from HFIAA requirements if similar laws are enacted in the foreign jurisdiction.
The enactment of the HFIAA aligns with the SEC’s ongoing reassessment of regulations affecting FPIs. In June 2025, the SEC released a concept document seeking public input on the definition of Foreign Private Issuer, indicating that further changes to regulations may be on the horizon.
As FPIs prepare to navigate these new obligations, the potential for complex and time-sensitive reporting requirements looms ahead. The landscape of compliance for foreign companies operating in U.S. markets is evolving, and the HFIAA marks a significant step towards increased transparency in foreign investments.
