Starting March 18, 2026, Section 16 of the U.S. Securities Exchange Act of 1934 will apply to certain foreign private issuers, requiring their directors, officers, and significant shareholders to publicly report equity ownership and trading activity under the same insider reporting framework long applied to U.S. domestic issuers.

This change eliminates a long-standing exemption that allowed most foreign private issuers to avoid Section 16 reporting, replacing it with a narrower, activity-based standard tied to U.S. market participation and governance structure.

What Section 16 Has Historically Required

Section 16 is one of the core transparency provisions of U.S. securities law. It applies to directors, executive officers, and beneficial owners of more than 10 percent of a registered class of equity securities. Covered insiders must disclose their holdings and transactions through Forms 3, 4, and 5, filed electronically with the U.S. Securities and Exchange Commission and made publicly available, usually within two business days for most trades.

The provision also includes a strict liability “short-swing profit” rule under Section 16(b). Any profits realized from a purchase and sale, or sale and purchase, of the issuer’s equity securities within six months may be recoverable by the issuer, regardless of intent. This rule is unique in U.S. securities law and has no direct analogue in most non-U.S. regimes.

For decades, however, most foreign private issuers were exempt from Section 16 entirely. Instead, they relied on home-country disclosure regimes and, in some cases, alternative reporting under Section 13(d) and 13(g).

What Changes on March 18, 2026

The March 18, 2026, effective date marks the implementation of amendments adopted by the U.S. Securities and Exchange Commission to narrow the foreign private issuer exemption from Section 16. The revised framework no longer provides a blanket carve-out based solely on foreign private issuer status. Instead, applicability now turns on a combination of listing venue, equity security registration, and the degree of insider participation in U.S. capital markets.

Foreign issuers that register a class of equity securities under Section 12 of the Exchange Act and whose governance or trading patterns mirror those of domestic issuers will now fall within Section 16’s scope. The SEC’s stated rationale is comparability: when foreign issuers access U.S. public markets in the same manner as U.S. companies, investors should receive equivalent insider-trading transparency.

Which Foreign Private Issuers Are Affected

Not all foreign private issuers will become subject to Section 16. The expansion is targeted, but still significant. The key trigger is the registration of equity securities under Section 12(b) or 12(g) of the Exchange Act, combined with active trading by insiders in the U.S. public float.

Issuers with Level I ADR programs that trade only over the counter and do not register equity under Section 12 generally remain outside Section 16. By contrast, foreign companies listed on the New York Stock Exchange or Nasdaq with registered ordinary shares or ADRs are far more likely to fall within the revised scope.

New Obligations for Foreign Directors, Officers, and Shareholders

For affected issuers, the practical impact is concentrated at the individual insider level. Directors and executive officers must file a Form 3 when they first become subject to Section 16, disclosing all beneficial ownership of covered securities.

Subsequent transactions, including option grants, exercises, and open-market trades, must generally be reported on Form 4 within two business days.

This reporting timeline is far shorter than what many foreign insiders are accustomed to under home-country regimes, where disclosure windows of five to ten trading days are common.

The change also requires familiarity with U.S. concepts such as “beneficial ownership,” indirect ownership through controlled entities, and transaction coding conventions unique to EDGAR filings.

Short-Swing Profit Liability: A Major Structural Shift

The extension of Section 16(b) liability to foreign insiders represents one of the most consequential aspects of the change. Unlike disclosure violations, which may result in SEC enforcement, short-swing profit claims are typically brought by issuers or shareholders through civil litigation. Liability does not depend on insider knowledge or intent. Timing alone controls.

For executives at foreign issuers accustomed to more principles-based insider trading rules, this is a sharp departure. Equity compensation practices common outside the U.S., such as frequent share recycling or overlapping buy-sell programs, can inadvertently create six-month matching transactions unless carefully structured.

From a governance perspective, this change effectively exports a U.S. enforcement mechanism into foreign boardrooms, even when the underlying issuer remains subject to home-country corporate law.

Interaction With Home-Country Disclosure Regimes

One of the SEC’s stated goals is harmonization rather than replacement. Section 16 obligations apply in parallel with, not instead of, home-country disclosure rules such as those under the EU Market Abuse Regulation or similar frameworks in the United Kingdom, Canada, and Asia-Pacific markets.

This dual-track reporting environment increases compliance complexity. Insiders must now assess whether a transaction triggers disclosure in multiple jurisdictions, each with different thresholds, timelines, and public dissemination methods.

Market Transparency and Investor Impact

From an investor perspective, the expansion of Section 16 reporting provides more granular and timely insight into insider trading liability ruling–related risks at foreign issuers with significant U.S. market presence. Academic research has consistently shown that insider transactions, particularly open-market purchases, carry informational value. A 2021 review of U.S. insider trading studies found abnormal returns of 3 to 6 percent over six months following clustered insider purchases, even after controlling for size and liquidity.

By bringing foreign issuers into the same disclosure regime, the SEC aims to eliminate informational asymmetries between domestic and foreign-listed companies competing for U.S. capital. This aligns with broader regulatory trends emphasizing equal treatment of investors regardless of issuer domicile.

Compliance Challenges for Foreign Issuers

The operational burden of Section 16 compliance should not be understated. Many foreign issuers will need to implement new internal reporting systems, insider trading policies, and pre-clearance procedures. EDGAR filing logistics, including CIK creation and access codes for individual insiders, introduce additional administrative steps.

There is also a cultural adjustment. In some jurisdictions, public disclosure of individual executive trades is rare or delayed. Section 16’s near-real-time transparency represents a shift not only in legal obligations but in market norms.

Why the SEC Made the Change Now

The SEC has pointed to the globalization of U.S. capital markets as the primary justification. As of 2024, foreign private issuers represented roughly 15 percent of NYSE-listed companies and over 20 percent of total market capitalization on certain trading days. Trading volumes in ADRs and foreign ordinary shares increasingly resemble those of domestic issuers.

In that context, the Commission concluded that maintaining a categorical exemption for foreign issuers undermined the policy objectives of Section 16. The March 18, 2026, effective date reflects a delayed compliance timeline intended to give issuers and insiders sufficient time to adapt.

Bottom Line

The expansion of Section 16 insider reporting to foreign private issuers beginning March 18, 202,6, materially changes the compliance landscape for non-U.S. companies listed in American markets.

It introduces U.S.-style insider transparency and short-swing profit liability to a group long exempt from those rules, aligning disclosure standards across borders while increasing legal and operational complexity for affected issuers.