What Are Section 16 Filings? A Beginner’s Guide 2025

Section 16 filings are a set of rules imposed by the U.S. Securities and Exchange Commission (SEC) to report the changes in the beneficial ownership and transactions of the company to the public. The foremost purpose of Section 16 is to ensure that the insiders of the company who have access to sensitive information of the company do not use it for their personal benefit. The officers, directors, and shareholders of more than 10% of the company are called the “Insiders.” Section 16 of the Securities Exchange Act of 1934 is enforced by the U.S. Securities and Exchange Commission (SEC). It is beneficial for investors or executives seeking to track and understand the activities of the company. Understanding the process surrounding the law can be complex, especially for beginners. In this blog, navigate through the basics of Section 16 for easy understanding. It also covers the updates in the process as of 2025.

Who Should File Under Section 16?

Section 16 applies to insiders of the company. The following individuals are required to file:

• Directors:Every member of the board of directors is considered an insider, regardless of whether they are executive or non-executive.
• Officers:CEO, CFO, COO, President, and Vice Presidents who are responsible for performing policy-making functions are the officers of the company.
• Shareholders of more than 10%:Any person who directly or indirectly holds more than 10% of the company’s stock.

These individuals are required to report to the U.S. Securities and Exchange Commission (SEC) on whether they buy, sell, or transfer ownership.

Purpose of Section 16 Reporting

Promoting Transparency

Section 16 allows insiders to make corporate activities public. By doing so, the common people as well as investors get to know about the company’s current transactions and holdings. Section 16 reporting builds confidence in investors to purchase more shares from the company that can further benefit them. The insider data is made accessible to small and large investors to ensure fair play in the market.

Prevent Insider Trading

Another important purpose of Section 16 is to prevent insider trading. Since insiders have access to sensitive information about the company, there is a risk that they might exploit it. Hence, information such as the earnings data, mergers, and leadership changes can be used for personal financial gains. Section 16 deters these possible frauds by requiring insiders to disclose their trade details promptly. The short-swing profit rule was implemented under Section 16 of the Securities Exchange Act of 1934 to prevent the misuse of the confidential information of the company.

Enhancing Investor Confidence

Disclosing insider transactions openly is a sign of transparency and reliability. Investor confidence relies heavily on the openness of the company. Investors are more likely to opt for organizations that maintain open communication and adhere to regulatory standards. For investors, the publicly available information is a convenient way of monitoring insider data.

Benefiting Regulatory Oversight

Yet another notable factor of Section 16 reporting is that it is advantageous for regulators and enforcement agencies. These filings are also utilized by the SEC to identify illegal activity or suspicious behavior. Repeated transactions by insiders have led to investigations.

Strengthening Corporate Governance

Section 16 works to the best advantage of shareholders. It demands transparency that eventually requires accountability among the insiders.

Encouraging Responsible Corporate Culture

Beyond compliance, Section 16 fosters an ethical corporate culture. When insiders are aware that their trades are being monitored and disclosed to the public, they are forced to act responsibly. Moreover, companies that consistently comply with Section 16 demonstrate discipline and ethical leadership that attract investors and strengthen brand reputation. Staying consistently active in updating the latest activities has proven to be helpful to the community of investors.

Section 16 Filing Deadline Rules

Section 16 of the Securities Exchange Act of 1934 requires the insiders to report their ownership and transactions. In 2025, strict guidelines are set around the filing procedures. Missing SEC filing deadlines can lead to serious consequences of paying penalties and also brings reputational damage.

Form 3

After an IPO, the newly appointed officers, directors, or shareholders are required to file Form 3. It is the initial statement of beneficial ownership. Form 3 reveals data about the insider and the stock they own until that date.

• Filing Deadline:Form 3 is the initial filing done once the person becomes an insider under Section 16 of the Securities Exchange Act of 1934.

Form 4

When there are material changes in the holdings of the insiders, Form 4 is filed. The purpose of filing Form 4 is to report the changes in ownership. Every change should be reported even if there is no change in the holdings for the month.

• Filing Deadline:The deadline to file Form 4 is within two business days of the transaction.

Form 5

Under Section 16 of the Securities Exchange Act of 1934, the U.S. Securities and Exchange Commission (SEC) requires companies to file transactions that have not been previously reported in Form 4. Exempt transactions like gifts or small transactions can be included in Form 5, and transactions that were failed to be reported should also be mentioned.

• Filing Deadline:Finally, Form 5 should be filed on or before 45 days of the company’s fiscal year end.

Staying regularly updated with the changes in the rules and regulations can minimize the need to face any future consequences. EdgarAgents makes your Section 16 filing process simple. We completely manage your filing process, from creating, managing, and filing, without the need to install or buy software.

Are Amendments Possible in Section 16 Filing?

The option to make amendments for the errors or omissions made exists for the already filed Form 3, 4, and 5. The filer can make changes to the same form and mark it as “Amended.” While doing so, it must clearly indicate that the file is an amendment so that the changes can be considered over the previous file. It allows the filers to maintain accurate data. While there is no specific deadline for making changes, it must be ensured that the amendments are made before the previously submitted file gets approved by the SEC. Not reviewing the filings before submission can reflect negatively on the company’s reputation and integrity. Make note of the previous mistakes to double check and make sure they are not repeated in the future. To prevent such unnecessary delays, one can opt for trusted SEC filing services that offer high-quality services. EdgarAgents not just carries out the process but ensures everything runs smoothly without any disruptions in the future. Our Section 16 filing services take care of the filing process for you completely.

Conclusion

Exploring the basics of Section 16 and being updated with the current changes allows the public to stay informed about the company’s internal workings. It is a way of promoting the integrity of the company. This is why it is important to stay aware of the process, deadlines, and costing of Section 16 to not get caught in serious consequences that may damage the reputation of the company.

FAQs

How Long Do Section 16 Filings Stay Public in 2025? 

Section 16 filings remain accessible to the public for as long as possible once they are filed through SEC/EDGAR.

What is the Cost of Filing Section 16 Reports with SEC 2025?

Compared to any other SEC filings, Section 16 filing does not require a fee, as per the SEC rules.

How Quickly Are Section 16 Filings Reported? 

Each form (3, 4, and 5) has its own deadlines. Every filing has to be done as quickly as possible.

Can Executives Skip Filing Section 16 in 2025? 

No, executives simply cannot skip Section 16 filings in 2025. Failure to do so can lead to legal consequences.

Can Insiders Delay Section 16 Filings Legally? 

No, insiders like officers, directors, and beneficial owners have strict deadlines and cannot legally delay Section 16 filings.

Is Section 16 Reporting Mandatory for All Officers? 

No, Section 16 reporting is mandatory only for certain officers of public companies. It depends on the specific roles and responsibilities defined by the SEC.

Do Foreign Issuers Follow Section 16 Filings Too? 

As per the U.S. Securities Exchange Act of 1934, foreign private issuers (FPIs) are not obliged to follow Section 16 filing requirements.