The U.S. Securities and Exchange Commission (SEC) has granted a conditional exemption from Section 16(a) reporting requirements for directors and officers of certain foreign private issuers (FPIs). According to SEC orders issued on March 5, 2026, and May 20, 2026, insiders at companies incorporated in specific jurisdictions—including the United Kingdom, Canada, and the European Economic Area—may bypass U.S. filing mandates if they comply with their home country’s “substantially similar” regulations.
Which jurisdictions qualify for the SEC exemption?
The SEC currently recognizes nine “qualifying jurisdictions” where local regulations satisfy U.S. transparency standards. As of the May 20, 2026, order, these include Australia, Canada, Chile, the European Economic Area (EEA), India, the Republic of Korea, Singapore, Switzerland, and the United Kingdom. To qualify, an FPI must be incorporated in one of these regions and remain subject to specific local reporting mandates, such as the UK Market Abuse Regulation or Australia’s Corporations Act 2001.
How does the English-language reporting requirement work?
The SEC mandates strict accessibility for international filings. Under the exemptive order, any report filed under a qualifying foreign regulation must be available to the public in English within two business days of its posting. If the local regulator’s database does not host an English version, the company must publish the document directly on its corporate website to maintain the exemption.
Why does the definition of “officer” matter for compliance?
The SEC’s definition of an “officer” under Exchange Act Rule 16a-1(f) is often broader than international equivalents. It includes the principal executive officer, principal financial officer, and anyone with a significant “policy-making function.” According to SEC guidance, if an FPI’s internal structure does not mirror these U.S. definitions—for instance, if a “principal accounting officer” role is rolled into the CFO’s duties—the company must still ensure every relevant individual is accounted for. Failing to map these roles correctly could lead to inadvertent non-compliance with the Holding Foreign Insiders Accountable Act (HFIAA).
What is the future outlook for global regulatory alignment?
The SEC’s recent orders signal a shift toward recognizing the “substantially similar” nature of international disclosure regimes. The Commission explicitly noted that it may expand this list of qualifying jurisdictions in future orders if other countries demonstrate that their insider trading regulations meet the SEC’s five-point criteria: covered persons, covered securities, covered transactions, report content/timeliness, and public availability in English. This suggests that as global markets harmonize, the burden of dual-reporting for FPIs may continue to decrease.
Frequently Asked Questions
Does the exemption apply to all directors automatically?
No. The exemption is conditional. Directors must be subject to a qualifying regulation in their home jurisdiction and ensure their reports are translated into English and made public within two business days.
What happens if a foreign regulation changes?
The SEC’s order relies on the current state of foreign laws. If a “qualifying regulation” is repealed or significantly amended in a way that no longer meets the SEC’s five criteria, companies should prepare for a potential loss of exemptive relief.
Where should I post reports if the local regulator doesn’t support English?
If the local regulator’s database lacks an English version of the report, the company must provide the document on its own website to satisfy the SEC’s public availability requirement.
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