SEC Approves Conditional Exemptive Order for Beneficial Ownership Reporting by Certain FPI Directors and Officers

On March 5, 2026, the U.S. Securities and Exchange Commission ("SEC") issued an order (the "Exemptive Order") that provides a conditional exemption from the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934 ("Exchange Act"), as amended by the Holding Foreign Insiders Accountable Act ("HFIAA") and the related rules adopted by the SEC to implement the HFIAA on February 27, 2026, discussed here. The Exemptive Order provides an exemption for certain directors and officers of foreign private issuers ("FPIs") if the FPI has been organized in a “qualifying jurisdiction” and the director or officer is subject to beneficial ownership reporting requirements under a “qualifying regulation.”

Reminder: the March 18, 2026, Filing Deadline Applies to Directors and Officers of FPIs Unless the Exemptive Order Applies

Unless the exemption provided by the Exemptive Order applies, directors and officers, as defined in Section 3(a)(7) of the Exchange Act, of FPIs must obtain individual EDGAR Next filing credentials and file timely beneficial ownership reports as required by Exchange Act Section 16(a) and the rules thereunder. The initial report of beneficial ownership on Form 3 must be filed not later than March 18, 2026. Reports of changes in beneficial ownership on Form 4 are generally due not later than two business days after a reportable transaction thereafter.

Conditions of the Exemptive Order and Compliance Considerations

The principal requirements of the exemption provided by the Exemptive Order are that (1) the FPI is organized under the laws of a “qualifying jurisdiction” and (2) the director or officer is required to report beneficial ownership of the FPI’s equity securities under a “qualifying regulation,” both as specifically identified in the Exemptive Order. The Exemptive Order applies even if the FPI’s jurisdiction of organization differs from the jurisdiction whose regulation constitutes the qualifying regulation. However, the exemption is available only for directors and officers who are required to file beneficial ownership reports under a qualifying regulation. As a result, the Exemptive Order may not apply to all of an FPI’s directors and officers who are subject to HFIAA. This and other conditions mean that although the Exemptive Order will provide welcome relief for directors and officers who can take advantage of the exemption, the conditions contained in the Exemptive Order present compliance considerations that FPIs should carefully review.

The exemption may not be available for every director and officer of an FPI. The Exemptive Order applies only to FPI directors and officers who are required to report beneficial ownership and changes in beneficial ownership under a qualifying regulation. It is possible that a qualifying regulation may not apply to all of the directors and/or officers of an FPI who are covered by the definitions of “director” and “officer” in Exchange Act Section 3(a)(7). FPIs will need to determine whether the Exemptive Order is available for each of their directors and officers.

The exemption requires public availability of English-language beneficial ownership reports. In order to provide public availability of information about insider beneficial ownership that is comparable to the requirements of Exchange Act Section 16(a), the Exemptive Order requires that English-language reports must be publicly available. If the relevant regulatory authority or listing venue does not make English-language reports publicly available, the FPI can satisfy this condition by posting the reports publicly on its website. FPIs must determine whether the relevant regulatory agency or listing venue makes English-language beneficial ownership reports publicly available; if not, FPIs must ensure that any required reports will be made publicly available on the FPI’s website.

The exemption requires that beneficial ownership reports must be publicly available within two business days. If the qualifying regulation provides a reporting deadline that is longer than two US business days, this condition may require accelerated reporting under the qualifying regulation. For purposes of the Exemptive Order, “business day” means any day other than Saturday, Sunday or a US federal holiday. If the relevant regulatory agency or listing venue cannot make English-language reports publicly available within two business days of a reportable event, an FPI can satisfy this condition by publicly posting English-language reports on its website within two business days. FPIs must ensure that English-language reports will be publicly available within two business days, which may require filing and/or public posting on a timetable that is shorter than that required under the applicable qualifying regulation.

Jurisdictional changes and/or changes in a qualifying regulation may affect availability of the exemption. The Exemptive Order is available only for entities that are organized under the laws of a specified qualifying jurisdiction and are subject to a specified qualifying regulation in a qualifying jurisdiction. If an FPI is no longer organized under the laws of one of the qualifying jurisdictions – for example, as the result of a merger, reorganization, or other corporate transaction – the exemption will no longer be available. Further, future changes in the requirements of a qualifying regulation may result in the SEC amending the Exemptive Order or issuing a new order that removes that regulation from the list of qualifying regulations. FPIs should monitor changes in the applicable qualifying regulation and consider the impact of any merger, reorganization, or other corporate transaction that results in a change of the FPI’s organizational jurisdiction when planning transactions of that type.

Controls and Procedures Implications. Given the scope and significance of the conditions contained in the Exemptive Order, we encourage FPIs that have not already done so to engage in a thorough review of how HFIAA (especially the requirements of Exchange Act sections 3(a)(7) and 16(a)), the SEC’s rulemaking under Exchange Act Section 16(a), the Exemptive Order, and the requirements of the SEC’s EDGAR Next electronic filing platform will affect the FPI and its directors and officers. It may be prudent to adopt new internal controls and procedures, or modify existing controls and procedures, in order to assure compliance with Section 16(a).

Qualifying Jurisdictions

The Exemptive Order requires that the FPI must be organized or incorporated under the laws of one of the specified jurisdictions, which include Canada, Chile, the European Economic Area ("EEA"), the Republic of Korea, Switzerland, and the United Kingdom. The EEA currently includes Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden as well as Iceland, Liechtenstein, and Norway. Future admission of a new state into the EEA will not automatically make that state a qualifying jurisdiction or its beneficial ownership reporting requirements, if any, a qualifying regulation for purposes of the Exemptive Order.

Qualifying Regulation

The Exemptive Order requires that a qualifying regulation must require directors and officers (or persons performing policy-making functions for the FPI) to disclose publicly the beneficial ownership of equity and derivative securities of the FPI and changes in beneficial ownership in a manner substantially similar to Exchange Act Section 16(a). The Exemptive Order specifically identifies the following regulations as a “qualifying regulation”: Canada’s National Instrument 55-104, Article 19 of the European Union Market Abuse Regulation, Article 19 of the United Kingdom Market Abuse Regulation, and specified insider reporting regimes in Chile, the Republic of Korea, and Switzerland. The Exemptive Order states that these regulatory structures are “qualifying regulations” because they require directors, officers, and persons performing similar policy-making functions to disclose their beneficial ownership of the FPI’s equity and derivative securities and subsequent changes in beneficial ownership of these securities on terms that are similar to Exchange Act Section 16(a).

As discussed above, the Exemptive Order imposes several conditions on the exemption from the beneficial ownership reporting requirements of Exchange Act Section 16(a). FPIs should ensure that all conditions in the Exemptive Order will be satisfied for each director and officer who is subject to HFIAA.

Future Exemptive Action

The Exemptive Order notes that the SEC may reassess and modify the Exemptive Order if future changes result in a qualifying regulation no longer imposing requirements that are substantially similar to Section 16(a). The SEC also noted that it may extend exemptive relief to the directors and officers of FPIs organized in other jurisdictions in the future.