While directors and officers of FPIs have historically been exempt from these reporting requirements, the HFIAA requires them to file Forms 3, 4 and 5 with the Securities and Exchange Commission (SEC) disclosing their holdings of and transactions in the equity securities of the public companies on which they serve as a director or officer.
The new law grants the SEC authority to exempt directors and officers from reporting transactions that are subject to “substantially similar” reporting requirements under non-U.S. law. As we discuss below, the SEC announced specific exempted countries and reporting regimes on March 5, 2026.
The HFIAA and SEC implementation
The HFIAA extends the existing Section 16(a) reporting requirements that currently apply to directors, officers and greater than 10% beneficial owners of U.S. domestic companies to directors and officers of FPIs. The SEC adopted final rules under the HFIAA on February 27, 2026, clarifying that directors and officers of FPIs will only be subject to the reporting requirements of Section 16(a) and will not be subject to the short-swing profit rules of Section 16(b) or the short sale prohibitions of Section 16(c). The rules also confirmed that beneficial owners of more than 10% of an FPI’s equity securities remain exempt from all Section 16 requirements. Finally, the rules made certain technical changes to Forms 3, 4 and 5.
The exemptive order
On March 5, 2026, the SEC issued an order exempting Section 16(a) reporting by directors and officers of FPIs that are both (1) organized or incorporated in a specified “Qualifying Jurisdiction” and (2) subject to reporting obligations under a specified “Qualifying Regulation,” which the SEC has determined are substantially similar to the Section 16(a) requirements.
The Qualifying Jurisdictions are limited to:
- Canada
- Chile
- European Economic Area
- The Republic of Korea
- Switzerland
- United Kingdom
The place of incorporation or organization of the FPI controls. Accordingly, directors and officers of an FPI that is not incorporated or organized in a Qualifying Jurisdiction are not covered by the exemption, even if the FPI’s securities trade in a Qualifying Jurisdiction, its headquarters are in a Qualifying Jurisdiction, or its directors and officers reside in a Qualifying Jurisdiction.
The Qualifying Regulations are:
- Canada. National Instrument 55-104 – Insider Reporting Requirements and Exemptions (supported by National Instrument 55-102 – System for Electronic Disclosure by Insiders (SEDI) and companion policies)
- Chile. Articles 12, 17, and 20 of the Chilean Securities Market Law (Ley de Mercado de Valores, Ley No. 18,045) and General Rule (Norma de Carácter General) No. 269
- European Union. Article 19 of the European Union Market Abuse Regulation (Regulation (EU) No. 596/2014, as amended by Regulation (EU) No. 2024/2809) (including, as applicable, implementing legislation and regulations adopted by the European Union’s member states) and as incorporated into the domestic law of each European Economic Area state
- South Korea. Article 173 of the Republic of Korea Financial Investment Services and Capital Markets Act and Article 200 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act
- Switzerland. Article 56 of the Listing Rules and implementing directives of SIX Swiss Exchange as approved by the Swiss Financial Market Supervisory Authority
- United Kingdom. Article 19 of the United Kingdom Market Abuse Regulation (Regulation (EU) No. 596/2014), as it forms part of United Kingdom domestic law pursuant to the European Union (Withdrawal) Act 2018
The jurisdiction of incorporation and the jurisdiction of the applicable Qualifying Regulation do not need to be the same.
The order also requires that:
- A director or officer seeking to rely on the exemption is required to report their transactions in the FPI’s equity securities in accordance with the Qualifying Regulation to which they are subject.
- This means that FPIs that wish to facilitate reliance by their directors and officers on the exemption must ensure that each individual who is considered a director or officer under Section 16(a) is also a required reporting person under the applicable Qualifying Regulation (in the order, the SEC noted that “any director or officer that does not fall within the defined category of reporting persons under the applicable Qualifying Regulation will still be required to file Section 16(a) reports”).
- Any report filed with a regulator under the Qualifying Regulation, if not originally filed in English, must be made available in English to the general public within two business days of its filing with the regulator. If an English version cannot be filed through the procedures used by the regulator, the report can be posted publicly on the FPI’s website.
Next steps
FPIs should first consider whether they can satisfy the requirements of the exemptive order described above and, if they do, FPIs should determine if their directors and officers who report under the Qualifying Regulation are the same as would be required under Section 16(a).
If an FPI cannot meet the requirements of the exemptive order, its directors and officers must file their initial beneficial ownership report on Form 3 with the SEC by 10:00p.m. Eastern Standard Time on March 18, 2026.
As clarified in implementation guidance issued on March 9, 2026 (the “FAQ Guidance”), for a person who is appointed or elected as an FPI director or officer after December 18, 2025 (the date the HFIAA was signed into law) but before March 18, 2026, the initial Form 3 must be filed by the later of March 18, 2026 or the date that is ten days after the person became an FPI director or officer. For a person who is appointed or elected as an FPI director or officer on or after March 18, 2026, the Form 3 must be filed by the date that is ten days after the person became an FPI director or officer. Filing Form 3 requires collecting information regarding each covered director and officer’s pecuniary interest in the issuer’s equity securities.
Additionally, all changes in beneficial ownership following the initial Form 3 filing must be reported on a Form 4 within two business days of the transaction. The FAQ Guidance clarifies that, for FPI directors and officers who become subject to Section 16 on March 18, 2026 as a result of the HFIAA, only transactions occurring on or after March 18, 2026 must be reported. Form 4 reporting requires clear communication channels between the covered director or officer and the FPI’s compliance officer or person in charge of such filings, to ensure they can be timely made.
In order to file Section 16(a) reports, non-exempt FPI directors and officers must create individualized EDGAR accounts, independent of the FPI’s EDGAR account. This process requires a notarized signature by the individual FPI director or officer and sufficient time for SEC processing and approval. Time periods from submission to approval may take two weeks or more. As such, FPIs must coordinate with both current and future directors and officers to ensure sufficient lead time in applying for EDGAR access.
We will continue to monitor developments as the SEC noted that it may extend exemptive relief to FPIs in additional Qualifying Jurisdictions who are subject to Qualifying Regulations.
