On Thursday, the SEC issued an order exempting insiders of some foreign private issuers from the rules that the SEC adopted one week prior under the Holding Foreign Insiders Accountable Act (HFIAA). Alan Dye covers this latest development on his Section16.net blog:

The SEC didn’t waste any time following through on Chair Atkin’s promise to determine whether directors and officers of foreign private issuers in certain jurisdictions should be exempted from the new Section 16(a) reporting requirements imposed by the Holding Foreign Insiders Accountable Act. (The HFIAA expressly authorized the SEC to exempt covered insiders from Section 16(a) if foreign laws already impose on them substantially similar requirements.) Yesterday, well in advance of the HFIAA’s March 18 effective date, the Commission issued an exemptive order exempting covered insiders if the issuer is organized under the laws of a “qualifying jurisdiction” and the insider is subject to reporting under a “qualifying regulation”.

The six qualifying jurisdictions are Canada, Chile, the European Economic Area, the Republic of Korea, Switzerland and the United Kingdom, and the six qualifying regulations are listed in the exemptive order. The exemption extends to insiders in a qualifying jurisdiction even if the insider is subject to the qualifying regulation of another qualifying jurisdiction (e.g., the issuer is organized in Canada but its securities trade in Germany).

To qualify for the exemption, insiders must report their transactions in English within two business days. If the jurisdiction in which reports are filed doesn’t accept filings in English, the exemption will still be available if the issuer posts an English language version of the report on its website by the end of the second business day after the report’s public posting.

A lot of FPIs can breathe a sigh of relief—their insiders won’t need to file a Form 3, by March 18 or at all.

For those insiders who were not relieved of their filing obligation by the SEC’s exemptive order, time is of the essence in getting ready for the March 18 effective date. As this Goodwin alert notes:

[T]hese reports must be filed electronically, which will require reporting individuals to obtain personal filing credentials by submitting a Form ID application in compliance with the EDGAR Next rules before they can file these reports. Form ID applications are subject to a variety of requirements that may be unfamiliar to directors and officers of FPIs. Form ID applications are also subject to review and approval by Securities and Exchange Commission (“SEC”) staff, which can take as little as several business days and as much as a week or more.

With just a week and a half to go until the effective date, submit your Form ID today if are obligated to file Section 16 reports! A sample Form ID has been posted in the Forms & Filings Handbook on Section16.net to get you started. If you do not have access to all of the amazing resources available on Section16.net, I encourage you to become a member today. You can contact us at info@ccrcorp, 800-737-1271 or fill out this form to get the ball rolling.

– Dave Lynn