SEC Exempts Directors and Officers of EEA FPIs from Section 16(a) Reporting—A Milestone for Transatlantic Regulatory Alignment

EU RegCORE Client Alert | Capital Markets Union + Savings and Investment Union

QuickTake

On 5 March 2026, the U.S. Securities and Exchange Commission (SEC) issued an exemptive order (Release No. 34-104931) Available here.Show Footnote granting directors and officers of certain foreign private issuers (FPIs) an exemption from the reporting obligations imposed under Section 16(a) of the U.S. Securities Exchange Act of 1934 (the Exchange Act). The exemption applies to FPIs incorporated or organised in a “qualifying jurisdiction”, comprising the European Economic Area (EEA), the United Kingdom, Canada, Chile, the Republic of Korea and Switzerland. Additionally, there must be a “qualifying regulation” in each of these jurisdictions imposing substantially similar disclosure requirements. This development is of particular significance to EEA-incorporated issuers with securities registered in the United States, as well as to their boards and senior management.

Section 16(a) of the Exchange Act requires corporate insiders, including directors, officers and beneficial owners of more than 10% of a registered company's equity securities, to publicly disclose their ownership and transactions in company equity securities to the SEC. It aims to prevent unfair use of non-public information by ensuring transparency. 

On 18 December 2025, the Holding Foreign Insiders Accountable Act (the HFIA Act) was enacted and amended Section 16(a) of the Exchange Act, extending the above-mentioned reporting obligations expressly to directors and officers of FPIs with registered (pursuant to Section 12 of the Exchange Act) equity securities. On 27 February 2026, the SEC adopted amendments to Exchange Act Rules 3a12-3(b) and 16a-2 to reflect the requirements of the HFIA Act. Critically, however, Section 16(a)(5) of the Exchange Act, grants the SEC authority to exempt persons, securities or transactions from Section 16(a) where the laws of a foreign jurisdiction apply substantially similar requirements.

Within the EEA, the EU Market Abuse Regulation (Regulation (EU) No 596/2014 as amended by Regulation (EU) No. 2024/2809) (EU MAR) imposes its own comprehensive disclosure obligations on persons discharging managerial responsibilities (PDMRs) and persons closely associated with them. Under Article 19 of MAR, PDMRs are required to notify both the issuer and the relevant national competent authority of transactions conducted on their own account in the issuer's financial instruments and issuers must in turn ensure public disclosure of such notifications. Based on its analysis, the SEC recognises that the obligations it imposes on PDMRs serve substantially similar regulatory objectives to those pursued by Section 16(a) of the Exchange Act. The exemption reflects a broader policy objective of reducing duplicative compliance burdens where a home jurisdiction regime already provides adequate investor protection and market transparency.

This Client Alert summarises the background to the SEC's exemption order, its scope and conditions, practical implications and the steps that affected institutions and their compliance and legal teams should consider taking in response.

Key takeaways from the exemption order

Scope of the Exemption

The SEC's exemptive order, which became effective immediately upon its issuance on 5 March 2026, grants relief from Section 16(a) reporting to directors and officers of any FPI that is (i) incorporated or organised in a qualifying jurisdiction and (ii) subject to a qualifying regulation. The qualifying jurisdictions and their corresponding qualifying regulations are as follows:

• EEA: Article 19 EU MAR
• United Kingdom: Article 19 of United Kingdom Market Abuse Regulation (Regulation (EU) No. 596/2014) as it forms part of United Kingdom domestic law pursuant to the European Union (Withdrawal) Act 2018 (UK MAR)
• Canada: National Instrument 55-104 – Insider Reporting Requirements and Exemptions
• Chile: Articles 12, 17, and 20 of the Chilean Securities Market Law and General Rule No. 269
• Republic of Korea: Article 173 of the Financial Investment Services and Capital Markets Act and Article 200 of the Enforcement Decree
• Switzerland: Article 56 of the Listing Rules of SIX Swiss Exchange

The EEA is expressly designated as a qualifying jurisdiction. The qualifying regulation for EEA issuers is Article 19 EU MAR, including implementing legislation and regulations adopted by EU Member States and as incorporated into the domestic law of each EEA state. Article 19 EU MAR requires PDMRs (which includes directors and officers) to promptly report to the issuer any changes in beneficial ownership of the issuer's securities, including a description of the security, the nature of the transaction and the price and volume of the transaction and requires that such reports be made available to the general public.

Importantly, the exemption is not limited to issuers incorporated in the EEA that are subject to EU MAR in their home jurisdiction. The SEC's order also extends to situations where an FPI is incorporated in one qualifying jurisdiction but subject to a qualifying regulation of a different qualifying jurisdiction. For instance, directors and officers of an FPI incorporated in Canada with securities registered in Germany and subject to Article 19 EU MAR would likewise be exempt from Section 16(a).

The SEC's Assessment of EU MAR

In determining that EU MAR meets the threshold of “substantial similarity” with Section 16(a), the SEC assessed the regulation against five criteria:

• Persons covered: EU MAR requires PDMRs, including directors and officers and persons who perform policy-making functions for the issuer, to report their transactions.
• Securities covered: PDMRs must report holdings of and transactions in equity securities or derivative securities relating to the issuer.
• Transactions covered: PDMRs must report transactions and other changes in beneficial ownership, including acquisitions and dispositions of any direct or indirect beneficial ownership interest.
• Reports: The required reports disclose the PDMR's beneficial ownership and changes in such beneficial ownership, with timely filing obligations.
• Public availability: Reports are publicly available electronically in English.

After the SEC reviewed the EU MAR and compared the respective requirements to the above criteria, it concluded that EU MAR covers substantially similar persons, securities and transactions as those covered by Section 16(a) of the Exchange Act and requires timely public disclosures of covered persons' changes in beneficial ownership.

Notably, the SEC has also reserved the right to reassess and modify the order if there are future changes to EU MAR or other material developments in any qualifying jurisdiction, such that the regulation is no longer substantially similar to the requirements of Section 16(a).

Dynamic Scope: Changes to EEA Membership

The SEC has addressed the position where the composition of the EEA changes over time. Any country that joins the EEA would also be required to adopt EU MAR and the exemption would accordingly apply to directors and officers of its FPIs. Conversely, a country that leaves the EEA may no longer be subject to EU MAR, in which case the directors and officers of its FPIs would no longer be eligible for the exemption to the extent that the country ceases to be subject to EU MAR.

Practical Implications for EEA FPIs

The exemption removes a significant compliance burden for EEA-incorporated FPIs and their boards. Directors and officers of such issuers will no longer need to prepare and file Forms 3, 4 and 5 with the SEC, eliminating the requirement to navigate two parallel insider disclosure regimes with differing procedural requirements and filing timescales.

It should be noted, however, that the exemption applies only to directors and officers of qualifying FPIs and not to beneficial owners holding more than 10% of an issuer’s equity securities. Such beneficial owners remain subject to the full scope of Section 16(a) reporting obligations, regardless of whether they are subject to EU MAR or any other qualifying regulation. EEA FPIs should ensure that any 10% beneficial owners are aware of their continuing filing requirements.

Additionally, the exemption relates solely to Section 16(a) reporting. Directors and officers of EEA FPIs remain subject to Section 16(b) of the Exchange Act, which provides for the recovery of short-swing profits realised from purchases and sales (or sales and purchases) of the issuer’s equity securities within any six-month period. EEA FPIs and their insiders should continue to monitor compliance with Section 16(b) and implement appropriate policies to mitigate short-swing profit liability.

However, the exemption places a heightened premium on full and demonstrable compliance with EU MAR. The SEC's decision is predicated on the equivalence of the MAR framework and any failure by PDMRs to comply with their notification obligations under Article 19 EU MAR could call into question their eligibility for the exemption and expose them to both EU and U.S. regulatory risk.

In summary, the SEC's exemptive order represents a significant development for EEA-incorporated issuers with securities registered in the United States. By recognising the substantial similarity of EU MAR to Section 16(a), the SEC has reduced duplicative compliance burdens for EEA FPIs, which promotes regulatory efficiency and reinforces the coherence of transatlantic insider disclosure standards. For EEA FPIs and their boards, this is a welcome step—but one that underscores the continued centrality of full compliance with EU MAR as the foundation upon which the exemption rests.

Key considerations and recommendations for EEA FPIs

In light of this development, we recommend that EEA FPIs and their advisers consider a comprehensive set of actions to ensure they are well-positioned to benefit from the exemption whilst maintaining full regulatory compliance.

1. Verify and strengthen EU MAR compliance
   
   The SEC's exemption is predicated on the substantial similarity of EU MAR to Section 16(a).  Accordingly, the single most important step for EEA FPIs is to ensure that their existing PDMR notification procedures are fully robust and auditable. FPIs should conduct a thorough review of their existing PDMR notification processes, including the mechanisms by which PDMRs report transactions to the issuer, the procedures by which the issuer notifies the relevant national competent authority and the processes for ensuring timely public dissemination of such notifications. Any procedural weaknesses identified should be remediated as a matter of priority, given that the continued availability of the exemption depends on ongoing compliance with the qualifying regulation.
2. Review and update insider lists
   
   EEA FPIs should review their insider lists to ensure that all individuals who are classified as directors or officers for the purposes of Section 16(a) are appropriately mapped against the PDMR classification under EU MAR. The definition of “director” and “officer” under Section 3(a)(7) and Rule 16a-1(f) of the Exchange Act may not correspond precisely with the definition of PDMR under EU MAR. Where an individual qualifies as a director or officer under the Exchange Act but does not fall within the defined category of PDMR under EU MAR, that individual will not be eligible for the exemption and must continue to file Section 16(a) reports with the SEC. Issuers should clearly identify any such individuals and ensure they receive separate guidance on their continuing U.S. filing obligations.
3. Address the English-Language Reporting Condition
   
   The English-language reporting condition should be carefully assessed. Issuers in jurisdictions where PDMR notifications are routinely filed in a language other than English should establish procedures to ensure that an English-language version is made publicly available within two business days of the original posting, whether through the relevant regulator's database or on the company's website.
4. Communicate the exemption to directors and officers
   
   The scope and conditions of the exemption should be clearly and formally communicated to all relevant directors and officers. This communication should explain that Section 16(a) reports are no longer required for individuals who qualify as PDMRs under EU MAR, whilst emphasising that all obligations under Article 19 of EU MAR continue in full force and that compliance with those obligations is a condition of the exemption. Directors and officers should also be made aware that the SEC has reserved the right to reassess the exemption and that any future changes to the regulatory landscape could alter their obligations.
5. Update internal policies and training
   
   Issuers should update their internal policies or documents, such as compliance manuals, insider dealing policies, to reflect the removal of the Section 16(a) filing obligation and to reinforce the primacy of EU MAR as the governing framework for PDMR transaction disclosure. Training programmes for directors, officers and compliance personnel should be revised accordingly, with particular emphasis on the English-language reporting condition and the importance of maintaining the standards of compliance upon which the exemption is founded.
6. Monitor regulatory developments 
   
   Finally, compliance and legal teams should establish an ongoing monitoring framework for SEC guidance, amendments and any further developments in transatlantic regulatory coordination. The SEC has expressly reserved the right to reassess and modify the order if there are future changes to EU MAR or other material developments, such that the regulation is no longer substantially similar to Section 16(a). EEA FPIs should engage proactively with their U.S. counsel and European regulatory advisers to ensure they remain abreast of any such developments and can adapt their compliance procedures accordingly.

Outlook and next steps

The SEC's order signals a broader trajectory towards enhanced regulatory interoperability between U.S. and international capital markets. The SEC has expressly noted that it may exercise its exemptive authority from time to time and extend exemptive relief to the directors and officers of FPIs incorporated or organised in other jurisdictions that set forth requirements substantially similar to Section 16(a) of the Exchange Act. EEA FPIs with operations or listings in non-qualifying jurisdictions should monitor whether those jurisdictions seek or obtain similar recognition in due course. As it already mentioned above, the dynamic nature of the exemption should also be borne in mind. The SEC has reserved the right to reassess and modify the order if there are future changes to EU MAR or other relevant changes in EEA Member States, that are sufficiently material such that EU MAR is no longer substantially similar to the requirements of Section 16(a).

More broadly, the SEC's willingness to recognise the equivalence of foreign regulatory regimes may encourage further bilateral and multilateral dialogue between U.S. and European regulators on matters extending beyond insider disclosure, potentially covering areas such as prospectus requirements, ongoing reporting obligations and corporate governance standards. For EEA FPIs, this could herald a more streamlined environment for accessing U.S. capital markets over the medium term.

About us

PwC Legal is assisting a number of financial services firms and market participants in forward planning for changes stemming from relevant related developments. We have assembled a multi-disciplinary and multijurisdictional team of sector experts to support clients navigate challenges and seize opportunities as well as to proactively engage with their market stakeholders and regulators.  

Moreover, we have developed a number of RegTech and SupTech tools for supervised firms, including PwC Legal’s Rule Scanner tool, backed by a trusted set of managed solutions from PwC Legal Business Solutions, allowing for horizon scanning and risk mapping of all legislative and regulatory developments as well as sanctions and fines from more than 2,500 legislative and regulatory policymakers and other industry voices in over 170 jurisdictions impacting financial services firms and their business. 

Equally, in leveraging our Rule Scanner technology, we offer a further solution for clients to digitise financial services firms’ relevant internal policies and procedures, create a comprehensive documentation inventory with an established documentation hierarchy and embedded glossary that has version control over a defined backward plus forward looking timeline to be able to ensure changes in one policy are carried through over to other policy and procedure documents, critical path dependencies are mapped and legislative and regulatory developments are flagged where these may require actions to be taken in such policies and procedures.   

The PwC Legal Team behind Rule Scanner are proud recipients of ALM Law.com’s coveted “2024 Disruptive Technology of the Year Award” and the “2025 Regulatory, Governance and Compliance Technology Award in 2025”.  

If you would like to discuss any of the developments mentioned above, or how they may affect your business more generally, please contact any of our key contacts or PwC Legal’s RegCORE Team via de_regcore@pwc.com or our website.