In brief
The US Securities and Exchange Commission (SEC) recently adopted amendments to the rules governing beneficial ownership reporting under Sections 13(d) and 13(g) of the Securities Exchange Act of 1934, as amended (Exchange Act). Among other changes, the amendments accelerate the deadlines for initial and amended Schedule 13D and Schedule 13G filings. The amendments will become effective on February 5, 2024. However, compliance with the revised Schedule 13G filing deadlines will not be required until September 30, 2024.
Contents
- Accelerated Schedule 13D deadlines
- Accelerated Schedule 13G deadlines
- Extended Filing “Cut-off” Times
The US Securities and Exchange Commission (SEC) recently adopted amendments to the rules governing beneficial ownership reporting under Sections 13(d) and 13(g) of the Securities Exchange Act of 1934, as amended (Exchange Act). Among other changes, the amendments accelerate the deadlines for initial and amended Schedule 13D and Schedule 13G filings. The amendments will become effective on February 5, 2024. However, compliance with the revised Schedule 13G filing deadlines will not be required until September 30, 2024.
Accelerated Schedule 13D deadlines
Initial Filings: Under the current reporting regime, an initial Schedule 13D is required within 10 calendar days after a person acquires more than 5% of a class of registered voting equity securities. The new deadline for initial Schedule 13D filings is five business days (BDs)1. The rules clarify that the first business day in the five-business day count is the day after the date on which beneficial ownership of more than 5% is acquired (rather than the date of such acquisition).
Amendments: The current rules require amendments to be filed “promptly” after any material changes in previously reported information. The term “promptly” is not defined by the current rules, which has caused variances in interpretation and practice. The new rules set the amendment filing deadline at two BDs after the date of the given material change.
| Current | New | |
| Initial Filing Deadline | Within ten calendar days of surpassing 5%. | Five BDs after date holdings surpass 5%. |
| Amendment Triggering Event | “Material” change. | Same as current. |
| Amendment Filing Deadline | “Promptly”. | Two BDs after the date of material change. |
Accelerated Schedule 13G deadlines
| Initial Filings: The current deadlines for Schedule 13G filings depend on whether a person files as a qualified institutional investor (QII) (pursuant to Rule 13d-1(b)), passive investor (pursuant to Rule 13d-1(c)) or exempt investor (pursuant to Rule 13d-1(d)). The new rules generally require the filing of an initial Schedule 13G within 45 days after the end of the quarter in which a QII or exempt investor crosses the 5% threshold at quarter-end or within five BDs of crossing the threshold for passive investors and subsequent amendments are generally required within 45 days after the end of a quarter in which there are any material changes in the information last reported. Shorter deadlines apply to QIIs or passive investors whose beneficial ownership exceeds 10%. | Qualified Institutional Investors: Regulated institutions of a type listed in Rule 13d-1(b) (e.g., banks, registered investment companies, investment advisers and broker-dealers, and certain employee benefit plans) who acquired and hold the securities in the ordinary course of business and “not with the purpose nor with the effect of changing or influencing the control of the issuer, nor in connection with or as a participant in any transaction having such purpose or effect.Passive Investors: Investors (other than institutions filing as QIIs) who beneficially own less than 20% of the relevant class and did not acquire and do not hold “the securities with any purpose, or with the effect, of changing or influencing the control of the issuer, or in connection with or as a participant in any transaction having that purpose or effect.Exempt Investors: Investors who beneficially own more than 5% of the relevant class but have not made an acquisition that is captured by Section 13(d). Common examples include pre-IPO investors and persons who exceed the 5% threshold due solely to a share repurchase. |
Amendments: Schedule 13G filers must now amend for “any material change” to the information previously reported. The adopting release notes that the same standards currently used to assess a “material change” for purposes of Schedule 13D amendments will apply to the materiality determination for Schedule 13G purposes. For example, the existing rule in Rule 13d-2(a) that the acquisition or disposition of 1% or more of a class of securities is “material” also applies when considering Schedule 13G materiality. There is no safe harbor for de minimis changes in beneficial ownership.
| Current | New | |
| Initial Filing Deadline | QIIs and Exempt Investors: 45 calendar days after calendar year-end in which beneficial ownership exceeds 5%.QIIs: Ten days after month-end in which beneficial ownership exceeds 10%.Passive Investors: Within ten days after acquiring beneficial ownership of more than 5%. | QIIs and Exempt Investors: 45 days after calendar quarter-end in which beneficial ownership exceeds 5%.QIIs: Five BDs after month-end in which beneficial ownership exceeds 10%.Passive Investors: Within five BDs after acquiring beneficial ownership of more than 5%. |
| Amendment Triggering Event | All Schedule 13G Filers: Any change in the information previously reported on Schedule 13G.QIIs and Passive Investors: Upon exceeding 10% beneficial ownership or a 5% increase or decrease in beneficial ownership. | All Schedule 13G Filers: Material change in the information previously reported on Schedule 13G. QIIs & Passive Investors: No change. |
| Amendment Filing Deadline | All Schedule 13G Filers: 45 days after calendar year-end in which any change occurred. QIIs: Ten days after month-end in which beneficial ownership exceeds 10% or there was, as of the month-end, a 5% increase or decrease in beneficial ownership. Passive Investors: Promptly after exceeding 10% beneficial ownership or a 5% increase or decrease in beneficial ownership. | All Schedule 13G Filers: 45 days after calendar quarter-end in which a material change occurred. QIIs: Five BDs after month-end in which beneficial ownership (i) exceeds 10% or (ii) increases or decreases by more than 5%. Passive Investors: Two BDs after beneficial ownership (i) exceeds 10% or (ii) increases or decreases by more than 5%. |
Extended Filing “Cut-off” Times
The amendments extend the filing “cut-off” times for filing Schedules 13D and 13G to 10:00 p.m. Eastern time from 5:30 p.m. Eastern time (mirroring the deadline for Section 16 filings).
1 Defined as “any day, other than Saturday, Sunday, or a Federal holiday, from 12:00 a.m. to 11:59 p.m. Eastern time.” The reference to the full 24-hour period clarifies the date on which a report is due if a person incurs a filing obligation on a business day outside of market hours.
