On December 18, 2025, President Trump signed the annual defense bill, aptly named the National Defense Authorization Act for Fiscal Year 2026 (the NDAA), into law. Buried in the NDAA, beginning on page 2718, congressional lawmakers included the "Holding Foreign Insiders Accountable Act" (the HFIAA). The HFIAA for the first time imposes the reporting obligations under Section 16 of the U.S. Securities Exchange Act of 1934 (the Exchange Act) on directors and officers of Foreign Private Issuers (FPIs), including Canadian companies that satisfy their reporting obligations utilizing the U.S.-Canada Multijurisdictional Disclosure System.1
History of the HFIAA
Similar proposals to subject directors and officers of FPIs to Section 16 reporting requirements have been introduced in the past but have failed to be enacted into law until now. In May 2022, Senator John Kennedy first introduced a version of the HFIAA, which he reintroduced in April 2023 in the wake of reports that investors in foreign companies trading on U.S. exchanges avoided losses by making seemingly informed stock sales ahead of declines. Most recently, Senators Kennedy and Chris Van Hollen unsuccessfully reintroduced the HFIAA in March 2025. Now, Section 16 reporting requirements have successfully been applied to FPIs through inclusion in and adoption of the NDAA.
Overview of Section 16 Reporting Obligations
Section 16(a) of the Securities Act of 1934 requires a company's "insiders" (meaning, its directors, its officers, and persons beneficially owning more than 10 percent of any registered class of its equity securities2) to file public reports with the U.S. Securities and Exchange Commission (the Commission) disclosing their ownership of, and transactions in (e.g., sales and acquisitions of), the company's equity securities. The required filings are made on Forms 3, 4 and 5, each of which is briefly described below.
Form 3: A Form 3 is an initial statement of an insider's ownership of a company’s securities. A Form 3 is required to be filed within 10 calendar days of a person or an entity becoming an insider or, for a company's existing insiders, on the same day that a company's registration statement under Section 12 of the Exchange Act3 becomes effective.
Form 4: A Form 4 is a statement of changes to an insider’s ownership of a company's securities and must be filed by the end of the second business day following a transaction by or involving the insider that changes the insider’s beneficial ownership of company securities, including, for example, buying or selling securities, receiving incentive equity grants or awards, exercising options and making gifts of securities.
Form 5: A Form 5 is required to be filed on or before the 45th day following the end of a company’s fiscal year by an insider who (a) should have filed a Form 3 or Form 4 but did not do so or (b) engaged in transactions with respect to the company’s securities that were exempt from being reported earlier during that year on a Form 4.4
Timing and Impact on FPIs
The HFIAA requires directors and officers of FPIs whose securities are registered under Section 12 of the Exchange Act at the time of enactment of the NDAA to make Section 16 filings beginning on March 18, 2026, which is the 90th day following the enactment thereof.
Notably, the HFIAA does not subject directors or officers of FPIs to the other provisions of Section 16, including the short-swing profit disgorgement provision of Section 16(b) (i.e., the obligation to pay over to the issuer any profits earned (or deemed to be earned) on purchases and sales, in whatever order, during any six-month period) and the restrictions on short sale transactions imposed by Section 16(c). Further, unlike Section 16 reporting requirements as applied to U.S. domestic issuers, the HFIAA only applies to directors and officers of FPIs and does not cause persons beneficially owning more than 10 percent of any registered class of securities of an FPI to become subject to the reporting requirements under Section 16(a).
Further, FPIs remain exempt from the SEC's rules related to proxy statements, including the requirement to disclose any Section 16 filing delinquencies. However, Section 16 reporting persons, including directors and officers of FPIs, can face potential SEC enforcement action and fines for Section 16 reporting failures.
The HFIAA provides the Commission with discretionary authority to exempt "any person, security, or transaction, or any class or classes of persons, securities or transactions, from the requirements of the HFIAA if the Commission determines that the laws of a foreign jurisdiction apply substantially similar requirements to such person, security, or transaction." While there may be instances in which such exemptive relief may be available in the future, it remains to be seen whether the current Commission will utilize that discretionary authority.
The enactment of the HFIAA is consistent with the Commission's efforts to reconsider the accommodations provided to FPIs under U.S. securities laws, including as described in the Commission's June 2025 concept release that requested public comment on the definition of foreign private issuer (which is summarized in our client advisory). The text of the concept release strongly suggests that additional changes relating to FPIs may be forthcoming.
Absent exemptive relief under the HFIAA and in the wake of any additional regulations or rule changes adopted by the Commission, FPIs and FPI officers and directors may face unfamiliar and, in some cases, complex and time-sensitive Section 16 and other reporting obligations. For those that need guidance concerning these matters, please reach out to a member of the Katten team.
1 Note that holders of greater than five percent of a class of voting securities of a company that is registered pursuant to Section 12 of the Exchange Act previously were, and continue to be, subject to reporting obligations under Section 13 of the Exchange Act.
2 Entities can be insiders for purposes of Section 16.
3 A registration statement under Section 12 of the Exchange Act is generally required to be filed to register a class of securities if the company issuing such securities either (a) lists those securities on a national stock exchange (e.g., Nasdaq or the New York Stock Exchange) or (b) on the last day of its fiscal year, both (i) has total assets in excess of $10 million and (ii) has either more than 2,000 holders of record of its securities or 500 holders of its securities who are non-accredited.
4 Exemptions from earlier reporting on a Form 4 include certain purchasers by an insider of less than $10,000 of company securities in a six-month period.
