Post by Caleb Woo, Head of Client Success

US AMENDS BENEFICIAL OWNERSHIP REPORTING RULES (13D-G) AFTER 50 YEARS

On 10 October 2023, the SEC adopted rule amendments governing beneficial ownership reporting under Exchange Act Sections 13(d) and 13(g), updating Reg 13D-G.

“Today’s adoption updates rules that first went into effect more than 50 years ago,” said SEC Chair Gary Gensler. He added that that the goal of the amendments is to accelerate access to material information by investors in today’s fast-paced financial markets.

Summary of the amendments:

1. Accelerated filing deadlines :

Schedule 13D:
 Initial filing deadline shortened from 10 days to 5 business days. Amendment filing deadline shortened from “promptly” to 2 business days

Schedule 13G:

  • Initial filing deadline:
    • Qualified Institutional Investors (QIIs): 
      • For beneficial ownership that exceeds 5%, shortened from 45 days after calendar year-end to 45 days after calendar quarter-end.

      • For beneficial owner that exceeds 10%, shortened from 10 days after month-end to 5 business days after month-end.

    • Passive Investors: Shortened from within 10 days to 5 business days

  • Amendment Triggering Event and Filing Deadline:
    • “Any change” to “Material change” in the information previously reported on Schedule 13G
    • QIIs: Shortened from 10 days to 5 days after month-end in which beneficial ownership exceeds 10% or a 5% increase or decrease in beneficial ownership
    • Passive Investors: “Promptly” to 2 business days
    • All Schedule 13G Filers: 45 days after calendar year-end to 45 days after calendar quarter-end

 

2. Structured data requirement: Schedules 13D and 13G must be filed using a machine-readable XML-based language. To that end, the SEC made technical changes to Reg S-T. 

Not adopted:

  • Cash-settled derivative securities: The SEC did not adopt a rule that would have deemed holders of cash-settled derivative securities to be beneficial owners of the underlying reference equity securities when the derivative securities are held with a control intent.
  • Group formation: The SEC did not adopt rules that would have provided specific guidance on when two or more persons “act as” a group or when a person becomes a member of a group simply by being notified that another person intends to file a Schedule 13D.

 

Rules Deadline:

Compliance with the revised Schedule 13G filing deadlines will be required beginning on Sept. 30, 2024. Compliance with the structured data requirement for Schedules 13D and 13G will be required on Dec. 18, 2024. Compliance with the other rule amendments will be required upon their effectiveness.

Artius Global Comments:

  • After many years, the SEC is finally modernizing its reporting rules. While other jurisdictions still have shorter timelines, these actions by the SEC marks a large acceleration.
  • For the various investors impacted by these rule changes, they would have a shorter time to manage and monitor their positions for reporting. Moreover, more frequent monitoring is also required, such as the calendar year-end vs. calendar quarter-end.
  • 13D-G filings that must be made using a structured, machine-readable data language would imply using software that is able to handle both human and machine-readable formats.
 

Connect With Us

For those wanting more information, feel free to contact us or drop us a note directly at enquiries@artiusglobal.com.

 

Read more here:
SEC Adopts Amendments to Rules Governing Beneficial Ownership Reporting

Modernization of Beneficial Ownership Reporting

 

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