The Securities and Exchange Commission (SEC) on March 5, 2026, issued an order granting directors and officers of foreign private issuers (FPIs) in certain locations—including Canada and most European countries—an exemption from the filing requirements of Section 16(a) of the Securities Exchange Act of 1934. This provision requires directors and top executives who own more than 10% of the company’s stock to disclose their ownership and any changes by filing Forms 3, 4, and 5 with the SEC.
Section 16(a) is intended to promote transparency and limit undisclosed insider trading activity.
The exemptive order follows the Holding Foreign Insiders Accountable (HFIA) Act, enacted in December 2025, and the SEC adopted the corresponding rule on February 27 in response to the congressional mandate.
Before the HFIA Act, only domestic companies had to comply with Section 16(a), but Congress has now created an even playing field across companies regulated by the SEC.
Under Section 16(a)(5), the commission may exempt individuals if a foreign jurisdiction imposes “substantially similar” reporting requirements. Using this authority, the SEC is granting exemptions to directors and officers of foreign private issuers incorporated or organized in certain “qualifying jurisdictions” and subject to corresponding “qualifying regulations.”
The qualifying jurisdictions listed in the order are Canada, Chile, the European Economic Area (EEA), the Republic of Korea, Switzerland, and the United Kingdom.
The EEA consists of the 27 member states of the European Union as well as Iceland, Liechtenstein, and Norway.
The qualifying regulations include:
- Canada’s National Instrument 55-104;
- Articles 12, 17, and 20 of Chile’s Securities Market Law and General Rule No. 269;
- Article 19 of the European Union Market Abuse Regulation;
- Article 173 of Korea’s Financial Investment Services and Capital Markets Act and Article 200 of its Enforcement Decree;
- Article 56 of the SIX Swiss Exchange Listing Rules; and
- Article 19 of the United Kingdom’s Market Abuse Regulation.
An FPI can be subject to a qualifying regulation in a different jurisdiction than the qualifying jurisdiction in which the FPI is incorporated or organized.
For example, a Canadian-incorporated company whose securities trade in a European country that incorporates EU market rules would qualify for the exemptive relief.
“However, even if an FPI is subject to a qualifying regulation (e.g., if its securities are listed in a qualifying jurisdiction), the exemptive relief does not apply to its directors and officers if the FPI is not incorporated or organized in a qualifying jurisdiction,” according to a memo by Sidley Austin LLP.
The exemption is subject to two conditions, according to Release No. 34-104931, Order Granting Directors and Officers of Certain Foreign Private Issuers an Exemption from the Filing Requirements of Section 16(a) of the Exchange Act.
First, directors and officers seeking to rely on this exemption must report their transactions under the qualifying regulation to which they are subject. Second, the reports filed under a qualifying regulation should be made available in English to the general public within two business days of their public posting.
According to the order, the commission reviewed each listed regulation and concluded that they cover substantially similar persons, securities, and transactions and require timely public disclosure of changes in beneficial ownership by covered persons.
“FPIs and their directors and officers that do not qualify for the SEC’s exemptive relief should continue to prepare for the implementation of the reporting requirements by the March 18, 2026, effective date,” the law firm memo states. “This includes implementing appropriate internal compliance procedures and ensuring they are enrolled in the SEC EDGAR Next system, which is required to file Section 16 reports with the SEC.”
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