Transcript

Scott:

Hello, I am Scott Snyder. I am once again pleased to be joined by Jennifer Froberg, Senior SEC Product Specialist at Toppan Merrill. Jen, welcome back to On The Dot.

Jen:

Thanks, Scott. Great to be with you again.

Scott:

Jen. On December 18, 2025, Congress adopted a bill which requires officers and directors of Foreign Private Issuers to comply with Section 16 of the 1934 Act, beginning March 18, 2026. On or before that date, they will need to file their initial Form 3, even if they have no beneficial ownership.

Can you give us a quick history lesson on Section 16 and the background on why the SEC has mandated this new requirement?

Jen:

Sure Scott. So, if you look back about 20 years ago, the SEC adopted Section 16 for US-based public companies. It requires officers, directors, and 10% owners to report their ownership in the company — anything they buy and sell. And that’s to provide transparency to the public, to the markets, and to prevent insider trading.

So, this new act extends the requirements to Foreign Private Issuers, just to their officers and directors.

Scott:

So, the act itself, this new requirement, does it have specific goals or stated objectives?

Jen:

So, it’s called the Holding Foreign Private Issuers Accountable Act, and it was actually part of the Defense Appropriations Bill for 2025, surprisingly. It requires those individuals for FPIs that I mentioned. Because they are going to have to comply with Section 16, their trades and their ownership will be public information now. So, more transparency as well as to prevent insider trading and similar activities in US markets.

Scott:

So, let’s talk to the who, because there’s always a who in these things.

Who precisely is the mandate going to affect?

Jen:

Officers and directors of FPIs will be required to report. 10% owners of those companies are exempt, and that’s a difference between the requirements for FPIs and domestic issuers.

Scott:

Of course, with the who, there is the when and how about that. The new compliance rule, when does it come into play? Are there dates? Specific timing that issuers should be aware of today?

Jen:

Absolutely, Scott. Timing is critical. So, March 18, 2026, is when this act becomes law. So, on that date, all officers and directors will be required to file their initial

• Form 3, as you mentioned, even if they don’t have any holdings in the company at that point. And then beyond that, there are some critical dates to be aware of.
• Form 3 is due within 10 calendar days after the event where an officer or director is appointed.
• Form 4 (which are the most common filing for Section 16) that’s anytime anyone purchases or sells some shares in the company. They have to be reported within two business days.
• Form 5 is due 45 days after the company’s fiscal year end.

And finally, those forms are able to be filed up until 10:00 pm ET. So that allows, if there’s a market activity during the day, someone buys or sells securities, they can then report that evening.

Scott:

So, Jen, kind of circling back to the who. There are probably a whole lot of new who’s, because of this ruling. And the rulings is going to prompt a lot of Form ID filings with issuers looking to obtain a CIK.

Let’s talk about that. What should issuers be concerned about from a timing perspective?

Jen:

Absolutely, Scott. We expect that most of these officers and directors have never filed with the SEC before, which means they have to submit a Form ID application to gain access to EDGAR.

So right now, the SEC has about a six-day business term time to approve Form ID applications. So, if you think about between now and March 18, that’s a very tight timeline for all the new filers to gain access to EDGAR.

Also think about the launch of EDGAR Next, which started in September. All of those filers who didn’t enroll also have to apply to the SEC for access. So, there’s a significant volume of new requests for the SEC to approve. Filers really need to act as quickly as they can.

Scott:

So, Jen, specifically around that Form ID, are there tips, hints you would offer in a conversation with an issuer? Things you would say, really think about these things now as you prepare for the new rule.

Jen:

It’s very important. We learned some lessons from EDGAR Next when people think about filing and filer access. So, if a Form ID is required, you can look through these five questions.

1. Confirm first if your office or directors have ever filed with the SEC. Do they have an existing CIK? The SEC has a simple search feature on SEC.gov where you can look for their name.
2. Secondly, if the filer does have a CIK, was the filer enrolled in EDGAR Next? That’s critical to determine.
3. Third, if the filer was enrolled in EDGAR Next, and you don’t know the administrators, check with the filer. Hopefully they know who enrolled them.
   • If that filer does have a CIK and was not enrolled, then a Form ID is required so that they can gain access to EDGAR.
4. Directors. Determine if they report with another company, if they serve on multiple boards. If they do, you will want to coordinate their access to EDGAR with that other company.
5.  Finally, if an officer or director has never filed with the SEC, then submit a Form ID for a new CIK.

Scott:

Jen, as we close out our conversation today, SEC rules often come with tentacles and foreshadow additional rulemaking.

What do you and the Toppan Merrill team see on the horizon?

Jen:

You’re absolutely right, Scott. There’s definitely a closer eye from federal regulators and Congress on disclosure and the actions of FPIs in US markets. Currently, FPIs are exempted from proxy reporting, from quarterly reporting. They were previously exempt from Section 16 reporting, so now this new requirement has been adopted.

In June 2025, the SEC issued a concept release asking what requirements they should have to file? If those should be changed? If the definition should be changed for them? There’s been a great deal of public comment about that, and these may signal future FPI changes in the future.

Scott:

Jen, another factual and informative conversation. Thanks for joining me today, and we’ll stay tuned for additional updates from you and the Toppan Merrill team on this topic and other SEC rulemaking.

Jen:

Thanks, Scott.