With the National Defense Authorization Act for 2026 (the NDAA) signed into law on December 18, 2025, directors and officers (also referred to as insiders) of Foreign Private Issuers (FPIs) with equity securities registered under Sections 12(b) or 12(g) under the Securities Exchange Act of 1934, as amended (the Exchange Act), will soon be required to report their holdings in, and certain transactions involving, equity securities of the FPI. Like their U.S. public reporting company counterparts, insiders of FPIs must file Forms 3, 4, and 5 (as applicable) under Section 16(a) of the Exchange Act. These rule changes mark a significant scaling of the exemptions previously available to FPIs and necessitate a shift in the routines and procedures at these issuers.
What Happened?
FPIs are entities incorporated or organized in a non-U.S. country that meet certain thresholds for ownership of voting securities by U.S. residents, along with meeting criteria for U.S.-based management, assets, and business activities. Prior to the signing of the NDAA, FPIs were specifically exempt from Section 16 (including Section 16(a)) pursuant to Exchange Act Rule 3a12-3 (Rule 3a12-3).
The NDAA effectively repeals the existing exemption for FPIs under Rule 3a12-3 and directs the SEC to adopt implementing rules before March 18, 2026. These rules, among other things, will mandate that insiders of FPIs begin filing Forms 3, 4, and 5 as required under Section 16(a). It is important to note, however, that Section 16(a) filing requirements will not apply to 10% or greater holders of FPIs.
What’s Next?
Management of FPIs should use the time ahead of March 18, 2026, to consult with legal counsel how to identify their directors and officers who will be subject to the new requirements. For their part, these insiders (once identified) should familiarize themselves with Section 16(a) and its underlying forms. Because many issuers assist insiders with meeting their reporting obligations through various compliance and support efforts, issuers should take the appropriate steps organizationally to help put in place the compliance mechanisms and infrastructure to support insiders to meet these new filing obligations. These efforts include assisting insiders with obtaining the codes required to file Forms 3, 4, and 5 on the SEC’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) system, if such insiders do not already have EDGAR codes. It is important not to delay because compliance with the Section 16(a) insider reporting requirements for FPIs begins on March 18, 2026.
It is important to note that insiders of FPIs remain exempt from both the short swing prohibitions under Section 16(b) of the Exchange Act and the short sale restrictions contained in Section 16(c) of the Exchange Act.
In addition, FPI issuers subject to the new rules should implement compliance processes, including pre-clearance procedures and monitoring equity compensation awards to ensure that required Form 4 filings after March 18, 2026, are not delinquent.