On December 18, 2025, President Donald Trump signed into law the National Defense Authorization Act for Fiscal Year 2026 (NDAA), which includes significant provisions for Foreign Private Issuers (FPIs). This legislation introduces the “Holding Foreign Insiders Accountable Act” (HFIAA), imposing new reporting obligations on directors and officers of FPIs under Section 16 of the U.S. Securities Exchange Act of 1934. This marks the first time such requirements will apply to FPIs, including those from Canada that utilize the U.S.-Canada Multijurisdictional Disclosure System.
Background on the Holding Foreign Insiders Accountable Act
The journey to enact the HFIAA has been lengthy. Previous attempts to implement similar reporting requirements for FPIs faced challenges and ultimately failed. In May 2022, Senator John Kennedy introduced an earlier version of the HFIAA, which he reintroduced in April 2023 following reports that foreign investors were able to avoid losses by selling stocks ahead of declines. Despite unsuccessful attempts by Senator Kennedy and Senator Chris Van Hollen to advance the legislation in March 2025, the HFIAA has now been successfully included in the NDAA.
Details of the Reporting Obligations
Under Section 16(a) of the Securities Exchange Act of 1934, insiders—including directors, officers, and individuals owning more than 10 percent of any registered class of equity securities—are required to file public reports with the U.S. Securities and Exchange Commission (SEC). These reports detail their ownership and transactions involving the company’s securities. The filings are made using three specific forms:
– **Form 3**: This initial statement of ownership must be filed within 10 calendar days of an individual becoming an insider or concurrently with a company’s registration statement under Section 12 of the Exchange Act.
– **Form 4**: This document reports changes to an insider’s ownership and must be submitted by the end of the second business day following a transaction that affects beneficial ownership, such as buying or selling securities.
– **Form 5**: Due on or before the 45th day after the end of a company’s fiscal year, this form is for insiders who failed to file a Form 3 or Form 4 or who engaged in exempt transactions during the year.
The HFIAA stipulates that directors and officers of FPIs must begin making these Section 16 filings starting on March 18, 2026, which is 90 days following the NDAA’s enactment. Notably, the HFIAA does not extend to other provisions of Section 16, such as the short-swing profit disgorgement rules or the restrictions on short sale transactions.
While the HFIAA applies only to directors and officers, it does not impose reporting obligations on beneficial owners of more than 10 percent of any FPI’s registered securities. Furthermore, FPIs continue to be exempt from SEC rules regarding proxy statements, including requirements to disclose any filing delinquencies related to Section 16.
The SEC retains discretionary authority under the HFIAA to exempt certain individuals or transactions from these requirements, provided they determine that similar obligations exist under the laws of another jurisdiction. Whether the current SEC will utilize this authority remains uncertain.
The enactment of the HFIAA aligns with the SEC’s ongoing efforts to reassess the treatment of FPIs within U.S. securities law. A concept release issued by the SEC in June 2025 requested public input on the definition of Foreign Private Issuer, hinting at potential future changes that could further impact FPIs and their reporting obligations.
As FPIs and their executives prepare for these new compliance requirements, they may face a complex landscape of Section 16 and other reporting obligations. The implications of the HFIAA are significant, marking a shift toward greater accountability and transparency for foreign entities operating within U.S. markets.
