In 2023, the Securities and Exchange Commission (the “SEC”) adopted amendments and issued guidance to modernize the rules governing beneficial ownership reporting under Sections 13(d) and 13(g) of the Securities Exchange Act of 1934 (the “Exchange Act”) when a person acquires more than 5% beneficial ownership of a voting class of equity securities registered under Section 12 of the Exchange Act. Unless a filer is eligible to file a Schedule 13G, any person who acquires beneficial ownership of more than 5% of a voting class of registered equity securities is required to file a Schedule 13D, which includes information about the filer and the underlying issuer, the type and amount of registered equity securities beneficially owned by the filer, the source and amount of funds used by the filer to acquire the registered equity securities, the purpose of the filer’s transactions in the registered equity securities and more. However, certain qualified institutional investors (QIIs)ꟷsuch as registered investment advisers, registered investment companies, insurance companies, broker-dealers, and banksꟷcertain passive investors and certain exempt investors are eligible to file a shorter statement on Schedule 13G.
The recently adopted amendments and guidance, as applicable:
- (i) shortened the filing deadlines of initial and amended beneficial ownership reports filed on Schedules 13D and 13G;
- (ii) extended the time of day that such reports may be filed and still be deemed as having been filed on the same business day;
- (iii) clarified the beneficial ownership analysis for holders of cash-settled derivative securities and amended the disclosure requirements relating to cash-settled derivative securities on Schedule 13D; and
- (iv) required Schedule 13D and 13G filings to be made using a structured, machine-readable data language.
The SEC also issued guidance clarifying the meaning of “act as a group” for purposes of sections 13(d)(3) and 13(g)(3) of the Exchange Act. This guidance is intended to clarify the SEC’s view that the determination of whether two or more persons are acting as a group does not depend solely on the presence of an express agreement and that, depending on the particular facts and circumstances, concerted actions by two or more persons for the purpose of acquiring, holding, or disposing of securities of an issuer are sufficient to constitute the formation of a group. Further, the SEC amended Rule 13d-5 regarding how acquisitions made by a group member are imputed to the group.
New Filing Deadlines
The table below summarizes the changes in filing deadlines for initial and amended beneficial ownership reports filed on Schedules 13D and 13G, effective as of September 30, 2024.
Conclusion
Investors and private fund managers should closely monitor their individual positions in public equities to determine whether a Schedule 13D or 13G filing is needed, and if so, work with counsel to prepare the applicable filing in a timely manner. Any filer with an existing Schedule 13D or 13G must adjust their quarter-end regulatory compliance processes to ensure that any required amendments to such Schedule 13D or 13G are filed before the new deadlines.
