Update: The National Defense Authorization Act for Fiscal Year 2026 was signed into law on December 18, 2025. As a result, the new Section 16(a) reporting requirement for directors and officers of foreign private issuers will take effect on March 18, 2026. The SEC is still required to enact final rules implementing the amendments. Issuers and their counsel should prepare to comply with the reporting requirements on March 18, but should stay tuned for SEC guidance, proposed rules and potential exemptive relief.
For those that haven’t had a chance to read the new National Defense Authorization Act for Fiscal Year 2026 that was passed by the US House of Representatives on December 10, 2025, the $900 billion spending package includes more than the typical items you would expect to see in the annual defense spending bill. The bill is now on its way to the Senate.
Starting on page 2,718 of the bill, there is a section entitled the “Holding Foreign Insiders Accountable Act.” Under this section, the bill proposes amendments to the disclosure requirements under Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). More specifically, the amendment would add directors or officers of foreign private issuers (“FPIs”) to the list of persons subject to the Section 16(a) disclosure requirements. It also adds a provision giving the Securities and Exchange Commission (“SEC”) authority to exempt any persons, securities or transactions where a foreign jurisdiction’s laws impose substantially similar requirements, which will be particularly relevant for dual‑listed FPIs.
The bill directs that, not later than 90 days after enactment, the SEC must issue final rules to carry out these amendments. In practical terms, the earliest these reporting obligations could become effective is Q2 2026, though SEC rulemaking will likely push the effective date to later in 2026. The SEC’s implementation and any related guidance could also address whether certain home‑country regimes warrant exemptions and whether the Form 20‑F will pick up any new timeliness disclosure requirements around late filings. The SEC must also, within one year of the bill’s enactment, conduct a study regarding “the transparency and cooperation” of broker-dealers and registered investment advisers controlled by, or organized in, the People’s Republic of China and submit such study to Congress.
Prior to these amendments, FPIs (and directors and officers of FPIs) have been exempt from the reporting requirements under Section 16 of the Exchange Act. As a reminder, in summary, Section 16(a) requires directors, officers and 10% or greater shareholders of public companies to publicly disclose their direct and indirect ownership of, and transactions in, the company’s equity securities to the SEC using Forms 3, 4, and 5. The bill does not amend the short swing profit rules under Section 16(b) (which requires disgorgement of profits from buying and selling within six months) or the restrictions in Section 16(c) that prohibit directors, officers and 10% or greater shareholders from engaging in short-sale transactions, so for the time being, insiders of FPIs will remain exempt from Sections 16(b) and 16(c). See the proposed amendments marked against current Section 16(a).