SEC Grants Section 16(a) Exemptions for FPIs in Key Global Jurisdictions

The U.S. Securities and Exchange Commission (SEC) has moved to significantly alleviate the compliance burden on international executives by issuing an order on March 5, 2026, that grants exemptions from new insider reporting requirements. This development follows the enactment of the Holding Foreign Insiders Accountable Act (HFIAA) in December 2025, which initially signaled a major shift in how the U.S. regulates foreign entities listed on its exchanges. Historically, Foreign Private Issuers (FPIs) enjoyed a long-standing exemption from Section 16 of the Securities Exchange Act of 1934, which requires directors, officers, and principal stockholders to report their holdings and transactions in a company's equity securities. The HFIAA sought to close this perceived gap in transparency, but the SEC’s recent order recognizes that many global jurisdictions already maintain rigorous oversight mechanisms that achieve similar ends.

By designating a list of Qualifying Jurisdictions, the SEC has effectively avoided a redundant and potentially conflicting double-reporting regime for thousands of global executives. The list includes Canada, Chile, the European Economic Area (EEA), the Republic of Korea, Switzerland, and the United Kingdom. To qualify for this relief, the SEC utilized a 'substantially similar' standard, evaluating whether the foreign jurisdiction's laws provide investors with a comparable level of insight into insider trading activities. For example, the SEC specifically identified Canada’s National Instrument 55-104 and Chile’s Securities Market Law (Ley No. 18,045) as meeting these criteria. This move is a pragmatic acknowledgment of the sophistication of global capital markets and a win for cross-border regulatory cooperation.

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The list includes Canada, Chile, the European Economic Area (EEA), the Republic of Korea, Switzerland, and the United Kingdom.

However, the exemption is not an absolute waiver; it is conditional upon specific transparency requirements that will necessitate active management by legal and compliance departments. Directors and officers must still report their transactions under their home jurisdiction's qualifying regulations. Crucially, these reports must be made available to the public in English within two business days of their initial posting. If the home regulator’s database does not provide an English version, the FPI is obligated to host the translated report on its own corporate website. This 'two-day rule' aligns with the standard U.S. Form 4 filing deadline, ensuring that U.S. investors are not disadvantaged by a lag in information flow compared to domestic issuers.