SECTION 16(a): New Disclosure Requirements for Foreign Private Issuers and their Implications for Brazilian Public Companies Listed in the United States

In the National Defense Authorization Act for Fiscal Year 2026, the US Congress included an amendment extending the disclosure requirements set forth in Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) to foreign private issuers (“FPIs”),¹ which had previously been exempt from such obligations. The bill was signed into law on December 22 and will become effective on March 18, 2026.

Section 16(a) requires directors, statutory officers and shareholders holding 10% or more of the company’s equity (collectively, “Insiders”) to publicly disclose their equity holdings and transactions involving the issuer’s securities with the US Securities and Exchange Commission (“SEC”).
In general terms, these disclosures in the United States are made through three forms:

• Form 3: Insiders disclose their initial beneficial ownership in the issuer. This filing must be made within 10 days of either the issuer’s IPO, or the date on which the individual becomes an Insider.
• Form 4: Insiders must report any and all transactions involving the issuer’s securities within two business days of the transaction. Reportable transactions include, for example, purchases and sales of shares in the open market or in private transactions; equity received under share-based compensation arrangements; transfers; gifts; corporate reorganizations; and adjustments resulting from corporate events.
• Form 5: This is a residual annual filing used to report transactions that were exempt from Form 4 reporting or that were not timely reported due to error or delay. Form 5 is filed annually within 45 days after the end of the issuer’s fiscal year, and its filing is not mandatory if there are no reportable transactions.

From a Brazilian law perspective, administrators and shareholders with relevant equity interests are also subject to disclosure obligations under CVM Resolution No. 44 (“RCVM 44”). Articles 11 and 12 of this regulation, issued by the Brazilian Securities Commission (Comissão de Valores Mobiliários, “CVM”), establish a mandatory disclosure framework for transactions carried out by persons with access to material nonpublic information, with a focus on transparency and the prevention of insider trading—similar to Section 16(a).

Pursuant to Article 11 of RCVM 44, administrators, members of the fiscal council, members of statutory technical or advisory bodies (“Brazilian Insiders”), as well as persons related to such individuals, must report to the issuer and to the CVM any transactions involving securities issued by the company or referenced thereto. The Brazilian Insiders must report each transaction to the issuer within five days of the date of the transaction. Based on these communications, the issuer must then disclose to the CVM, by the 10th day of each month, counted from the beginning of the subsequent month, both individual and consolidated information regarding the transactions carried out by the Brazilian Insiders during the prior month. The consolidated information is, in turn, publicly disclosed to the market.

Article 12 of RCVM 44 governs the disclosure of relevant shareholdings, focusing on transparency regarding ownership structures and influence over public companies. Under this provision, any shareholder, or group of shareholders acting in concert, must notify the issuer whenever its direct or indirect ownership interest reaches, exceeds or falls below the thresholds of 5%, 10%, 15% and subsequent multiples of a given class or type of the issuer’s shares. Such notice must include, among other information, the investor’s name and taxpayer identification number (e.g., CPF or CNPJ), the number of shares held, the existence of financial instruments or derivatives referenced to the issuer’s shares, and the purpose of the investment, and the public company is responsible for ensuring the timely public disclosure of this information to the market.

Brazilian companies that are FPIs, including many Brazilian companies listed on the NYSE or Nasdaq, benefit from a number of regulatory accommodations when compared to U.S. domestic issuers. As of March 2026, however, these companies will also become subject to the Section 16(a) reporting regime, including the filing of Forms 3, 4 and 5.

Although the statutory amendment becomes effective automatically in March 2026, the law grants the SEC authority to regulate the application of Section 16(a) to FPIs, including the ability to conditionally or unconditionally exempt certain persons, classes of persons, securities or transactions if the regulatory authority of a foreign jurisdiction imposes requirements that are “substantially similar” to those of Section 16(a), as is arguably the case under Brazilian regulation. At this stage, however, there is no clarity as to how the SEC will define or apply this standard, or how quickly the SEC will act. As a result, FPIs and their Insiders should prepare to fully comply with the Section 16(a) requirements.

Most significantly, individuals that will be newly subject to Section 16(a) reporting will need to apply for access to EDGAR,² the SEC’s electronic filing system, in order to file the required reports.  There may be a delay in the SEC’s processing of such applications, and therefore FPIs and their directors and officers should take steps in the near future to begin the process. In addition, the application of Section 16(a) is expected to require Brazilian FPIs, particularly those that are public companies listed in the United States to:

• Enhance their compliance and investor relations structures to adapt current practices to the new US disclosure requirements (particularly the two business day reporting deadline for transactions in issuer securities), while ensuring consistency with Brazilian regulations;
• Update their securities trading and disclosure policies;
• Reassess the definition of persons subject to insider reporting obligations. By way of example, the concepts of “directors” and “officers” for purposes of defining Insiders are broader under US law than under Brazilian regulation. While Brazilian rules are formally limited to statutory officers, members of the board of directors and the fiscal council, as well as other statutory bodies, US regulation adopts a more functional approach, encompassing any individuals—statutory or not—who perform significant policy-making functions, regardless of job title or formal corporate designation; and
• review the consistency and symmetry of disclosures across the different jurisdictions in which the company reports. In accordance with Section 16(a), individualized information regarding each Insider’s trading activities is publicly disclosed. Under the Brazilian regime, however, as provided in Article 11 of CVM Resolution 44, information on the individual trading activities of Brazilian Insiders is reported to the CVM but is not publicly disclosed, with only consolidated information—organized by management body (board of directors, statutory officers, fiscal council and members of statutory committees) and by controlling shareholders—being made publicly available.

Even with the extension of Section 16(a) disclosure obligations to FPIs, the regimen does not apply as fully as it does for US domestic issuers. One difference between the treatment of US issuers compared to FPIs is that the disclosure obligations apply only to FPIs’ directors and officers, not FPIs’ significant shareholders. In addition, the most significant exemption relates to Section 16(b) of the Exchange Act, which establishes an automatic liability mechanism for Insiders. Section 16(b) requires that any profits realized by directors, officers or significant shareholders from purchases and sales of the issuer’s shares occurring within a period of less than six months be fully returned to the issuer, regardless of intent, fault or use of inside information. This mechanism—known as the short-swing profit rule—is strictly objective and operates as an automatic sanction. FPIs remain expressly exempt from this requirement, meaning that although their directors and officers will be required to disclose transactions through Forms 3, 4 and 5, they will not be subject to mandatory disgorgement of profits from short-term trading.

The extension of Section 16(a) disclosure requirements to foreign private issuers under the National Defense Authorization Act for Fiscal Year 2026 represents a significant recalibration of the transparency regime applicable to FPIs and their insiders, with immediate practical implications for Brazilian companies listed in the United States. Future SEC rulemaking may play an important role in shaping compliance, particularly with respect to potential equivalency-based exemptions and possible adjustments to periodic reporting obligations.

This content was produced in partnership with partner Rodolfo Constantino Tella and associates Natália Carvalho Minotto and Camilla Hehnes, of Tauil & Chequer Advogados in association with Mayer Brown.

 

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¹ Any foreign issuer (other than a foreign government) can qualify as an FPI if (i) 50% or less of its outstanding voting securities are held of record directly or indirectly by US residents; or (ii) more than 50% of its outstanding voting securities are held by US residents, and it has none of the following contacts with the United States: (a) a majority of its executive officers or directors are U.S. citizens or residents; (b) more than 50% of its assets are located in the United States; or (c) its business is administered principally in the United States.

² EDGAR (Electronic Data Gathering, Analysis, and Retrieval system) is the electronic filing system maintained by the SEC for the submission, storage and public dissemination of documents required under US securities laws, including periodic reports filed by public companies and insider transaction disclosure forms, such as Forms 3, 4 and 5. Access to EDGAR requires prior registration with the SEC, including the issuance of specific identification codes and electronic authorization credentials for purposes of submitting filings.