Officers and directors of foreign private issuers will become subject to Section 16(a)’s reporting requirements on March 18. Ten percent owners were notably not covered by the SEC’s announcement, and not everyone is happy about this. As noted last week on Alan Dye’s Section16.net blog, the three scholars whose 2022 research paper led to the enactment of the Holding Foreign Insiders Accountable Act have filed a rulemaking petition asking the SEC to adopt rules implementing the Act before the mandatory compliance deadline. Here’s more from the blog:

While the Act’s rescission of the Section 16(a) exemption for (certain) insiders of foreign private issuers becomes effective on March 18 regardless of whether the SEC adopts implementing rules, the petition states that the SEC should clarify the scope of the Act by extending 16(a) to ten percent owners as well as directors and officers (which the petition says is at least implicitly mandated by the Act).

The petition also asks the SEC to (1) make clear that Section 16(a) applies to an FPI’s directors by deputization and (2) focus FPIs on the definition of “officer” so they don’t develop underinclusive lists based on the law or customs of the FPI’s home jurisdiction.

The petition also recommends that, when considering whether to exempt insiders from Section 16(a) because their home jurisdiction imposes substantially similar reporting requirements, the SEC take into account (1) whether the foreign jurisdiction imposes a filing deadline comparable to the two-business-day deadline for Form 4, (2) whether filings are made in English, and (3) whether filings are made electronically, allowing easy access by other investors.

For more information on what’s coming for FPIs, see this detailed Mayer Brown blog and our resources on Section16.net.

And don’t forget to join today’s webcast “Alan Dye on the Latest Section 16 Developments” at 1:30 pm ET. Section16.net members are able to attend this critical webcast at no charge. The webcast cost for non-members is $975. If you’re not yet a member, sign up now by sending us an email at info@ccrcorp.com — or calling us at 800.737.1271.

– Meredith Ervine