The SEC adopted yesterday rule amendments relating to the reporting of beneficial ownership under Sections 13(d) and 13(g) of the Securities Exchange Act of 1934 (“Exchange Act”). Importantly, the amendments require market participants (including investment advisers and private funds) to provide more timely information on their positions pursuant to Regulation 13D-G.
Reporting Deadlines
- The amendments shorten the filing deadline for initial Schedule 13D filings from ten days to five business days and require that amendments to Schedule 13D be flied within two business days.
- For certain Schedule 13G filers (e.g., qualified institutional investors, such as registered investment advisors), the amendments shorten the initial filing deadline from 45 days after the end of a calendar year to 45 days after the end of the calendar quarter in which the investor has beneficial ownership of more than 5% of the covered class of securities.
- For other 13G filers (e.g., passive investors), the amendments shorten the initial filing deadline from ten days to five business days. In addition, for all 13G filers, the amendments generally require that an amendment be filed 45 days after the calendar quarter in which a material change occurred rather than 45 days after the calendar year in which any change occurred.
- The amendments also accelerate the Schedule 13G amendment obligations for qualified institutional investors and passive investors when their beneficial ownership exceeds 10% or increases or decreases by 5%
Other Changes
- The amendments provide clarification regarding the Schedule 13D disclosure requirements with regard to derivative securities.
- There is also a new requirement to make Schedule 13D and 13G filings using a structured, machine-readable data language.
- Guidance is provided regarding the current legal standard governing when two or more persons may considered a group in terms of determining whether a beneficial ownership threshold has been met.
- Guidance was also provided regarding how an investor’s use of certain cash-settled derivative securities may result in the person being treated as a beneficial owner of the class of the reference equity securities.
Next Steps
The adopting release will be published in the Federal Register and the amendments will become effective 90 days after publication in the Federal Register. Compliance with the revised Schedule 13G filing deadlines will be required beginning on September 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.
To view the final rule adopted by the SEC, click here.
For more information about these rule changes, please contact NCA Compliance.
Hayley Nelson is the President and Principal Consultant of NCA Compliance, Inc., a compliance consulting firm providing a wide range of customized compliance solutions for investment advisors. Ms. Nelson previously worked for the Securities and Exchange Commission and a large investment manager in New York.
