SEC Tightens Reins: New Disclosure Rules for Foreign Companies

The U.S. SEC has finalized rules mandating transparency of shareholdings and transactions by directors of foreign companies on U.S. markets. These measures respond to a congressional mandate and aim to enhance investor disclosures, especially affecting entities from countries like China. The rules become effective March 18.

The U.S. Securities and Exchange Commission (SEC) on Friday announced it has finalized rules mandating foreign companies traded in the United States to disclose their directors' and officers' shareholdings and transactions. This development aligns with a congressional mandate from late last year.

These new regulations signal a more stringent regulatory landscape for foreign entities operating within the U.S. financial markets. The SEC had already embarked on a rule-making process requiring increased transparency in investor disclosures from foreign firms, specifically to mitigate advantages previously enjoyed by Chinese companies. The finalized rules will compel top executives and board members of foreign private issuers to begin reporting their holdings by March 18, following the compliance requirements of the new law, the 'Holding Foreign Insiders Accountable Act,' according to an SEC statement.

This legislative shift, enacted by Congress last December, closes prior exemptions for foreign company insiders and aligns their disclosure responsibilities with those of U.S.-based company officials.

(With inputs from agencies.)