Background

Section 16 of the Exchange Act generally applies to the directors and officers of any issuer with a class of equity securities registered under Section 12 of the Exchange Act, as well as to persons who beneficially own more than 10% of such class. Section 16(a) generally requires these “insiders” to report their holdings of, and transactions in, the issuer’s equity securities by means of filings on Forms 3, 4, and 5.

SEC rules have traditionally exempted FPI insiders from Section 16(a) reporting. The HFIAA changed that by amending Section 16(a) to cover FPI directors and officers. The HFIAA directed the SEC to revise its rules and forms accordingly.

The SEC’s Implementing Amendments

The SEC’s rule and form amendments are consistent with the statutory scope of the HFIAA.

Only FPI Directors and Officers Are Subject to Section 16(a) Reporting

The SEC has confirmed that the new Section 16(a) reporting requirements mandated by the HFIAA apply only to an FPI’s “directors,” as defined in Section 3(a)(7) of the Exchange Act, and “officers,” as defined in Rule 16a-1(f).

The SEC has not extended, as some had speculated it might, Section 16(a) reporting obligations to an FPI’s 10% beneficial owners. That is, a 10% beneficial owner will be subject to Section 16(a) reporting only if, and solely on the basis that, it is also a director or an officer of the FPI.

FPI Exemptions under Sections 16(b) and 16(c) Remain Intact

Consistent with the HFIAA, all of an FPI’s insiders — directors, officers, and 10% beneficial owners — will continue to be exempt from Section 16(b), which concerns disgorgement of short-swing trading profits, and Section 16(c), which generally prohibits short sales.

Potential Jurisdictional Exemptions Not Yet Addressed

The HFIAA authorizes the SEC to exempt from Section 16(a) reporting the directors and officers of FPIs organized in jurisdictions which the SEC deems to impose requirements substantially similar to Section 16(a). While SEC Chair Paul Atkins has stated that the SEC staff is “actively evaluating” the matter, it remains to be seen whether and when the SEC might exercise this exemptive power. At this point, therefore, all FPI directors and officers should assume that they will be subject to Section 16(a) reporting as of March 18, 2026.

Next Steps

As noted in our previous alert, we recommend that FPIs continue to focus on the following points in advance of March 18, 2026:

• Reach a conclusion on the identity of the FPI’s Section 16 “officers,” paying particular attention to the definition of that term expressed in Rule 16a-1(f).

• Obtain EDGAR access and coordinate filing permissions.

• Prepare a Form 3 for each director and officer, so they are ready to be filed by March 18, 2026.

• Plan for internal reporting responsibilities and mechanics, including ensuring that any pre-trade clearance procedures for directors and officers enable Forms 4 to be filed within the two-business-day deadline following a reportable transaction.

• Update compliance policies and procedures to address Section 16(a) reporting by directors and officers, and consider arranging relevant training for those individuals.

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