Earlier this year, we wrote about a proposal buried within the Senate version of the National Defense Authorization Act for Fiscal Year 2024 that would effectively make insiders of foreign private issuers (FPIs) subject to both the reporting requirements and short-swing profit recovery provisions of Section 16 of the Securities Exchange Act.
FPIs and their insiders can now breathe easy. Last week, the Senate and House Armed Services Committees completed their conference on the bill, and the proposed language rescinding the Section 16 exemption for insiders of FPIs was dropped. This means that the proposal to repeal the Section 16 exemption for FPIs will not be enacted this year.
Although this particular proposal did not make it through the US legislative process, FPIs should keep in mind that there have been other rules approved by the Securities and Exchange Commission (SEC) in late 2022 and 2023 that impact their current and future reporting and disclosure requirements. These include rules relating to the clawback of incentive compensation from executive officers, share repurchase reporting and cybersecurity disclosures. For more details on the recent SEC rulemakings that have implications for FPIs, see our publications related to clawbacks, share repurchases and cybersecurity.
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