In an update to its previous ruling, the U.S. Securities and Exchange Commission (SEC) issued a new order granting an exemption from beneficial ownership reporting requirements under Section 16(a) of the Securities Exchange Act for officers and directors of certain foreign private issuers (FPIs), including many reporting Canadian FPIs. As outlined in our previous blog post, all reporting FPIs faced a deadline of March 18, 2026, to comply with Section 16(a) reporting under the previous ruling.
This new order exempts officers and directors of any FPI that is:
- incorporated or organized in a “qualifying jurisdiction,” which includes Canada as well as certain European nations, Chile, and South Korea; and
- is already subject to a “qualifying regulation,” found in qualifying jurisdictions which are considered by the SEC to be “substantially similar” to the disclosure requirements of Section 16(a).
Each such qualifying regulation generally requires officers and directors to disclose their holdings in an issuer’s equity and derivative securities, along with changes in those holdings and other related information.
The SEC specifically named Canada’s National Instrument 55-104 – Insider Reporting Requirements and Exemptions (supported by National Instrument 55-102 – System for Electronic Disclosure by Insiders (SEDI)) to be a “qualifying regulation.” Under these SEDI reports, directors and officers of reporting Canadian FPIs already report their initial holdings and 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 such reports are made available to the general public. All these criteria are broadly in line with Section 16(a) reporting requirements.
This order should provide relief to many Canadian FPIs that have been diligently preparing to comply with the previous ruling and likely have already taken substantial steps to do so (such as obtaining SEC filing codes for reporting persons). Notably, FPIs organized in jurisdictions that are not “qualifying jurisdictions” but that are subject to Canadian reporting will not be exempt, for example, a Cayman Islands issuer that is already filing insider reports on SEDI.
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