Shorter Time to Report 13D and 13G Beneficial Ownership – are you ready?

Shorter Time to Report 13D and 13G Beneficial Ownership – are you ready?

Have you updated your policies and procedures to adapt to the shorter reporting period?? Is your monitoring up to snuff?

On October 10, 2023, the Securities and Exchange Commission adopted rule amendments governing beneficial ownership reporting under Sections 13(d) and 13(g) of the Securities Exchange Act of 1934.?

Exchange Act Sections 13(d) and 13(g), along with Regulation 13D-G, require an investor who beneficially owns more than 5 percent of a covered class of equity securities to publicly file either a Schedule 13D or a Schedule 13G, as applicable. An investor with control intent files Schedule 13D, while Exempt Investors and investors without a control intent, such as Qualified Institutional Investors and Passive Investors, file Schedule 13G.

For Schedule 13D:

The amendments shorten the initial filing deadline from 10 days to five business days and require that amendments be filed within two business days.

For Schedule 13G filers (that are qualified institutional investors and exempt investors):

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 beneficially owns more than 5 percent of the covered class.

For other Schedule 13G filers (i.e., passive investors):

The amendments shorten the initial filing deadline from 10 days to five business days.

In addition, for all Schedule 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.

Finally, the amendments accelerate the Schedule 13G amendment obligations for qualified institutional investors and passive investors when their beneficial ownership exceeds 10 percent or increases or decreases by 5 percent.

Some good news, to ease filers’ administrative burdens associated with the shortened deadlines, the amendments extend the filing “cut-off” times in Regulation S-T for Schedules 13D and 13G from 5:30 p.m. to 10:00 p.m. Eastern time.

To remove uncertainty as to the scope of Schedule 13D’s disclosure requirements with respect to derivative securities, the amendments revise Item 6 of Schedule 13D to clarify that a person is required to disclose interests in all derivative securities (including cash settled derivative securities) that use the issuer’s equity security as a reference security.

Additionally, the amendments require that these filings use a structured, machine-readable data language. This requirement applies to all information disclosed on Schedules 13D and 13G (other than exhibits).

Have you updated your policies to be able to respond within two days if necessary??Have you changed your reporting monitoring to be able to file 45 days after the calendar quarter as opposed to the after the calendar year?