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SEC Amendments to the Rules Governing Beneficial Ownership Reporting

November 27, 2023
6 minute read

The U.S. 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 (the Exchange Act).

Filing Deadline Amendments

The SEC made the following amendments to the Schedule 13D and the Schedule 13G filing deadlines:

Schedule 13D:

For Schedule 13D, the amendments shorten the initial filing deadline from 10 days to five business days after the date on which a person acquires beneficial ownership of more than 5 percent of a covered class. The amended rules also require that amendments to Schedule 13D be filed within two business days after the date on which a material change occurs, replacing the “promptly” standard that existed prior to the amended rules.

Schedule 13G:

  • For certain Schedule 13G filers (i.e., 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, as of the end of that quarter.
  • For other Schedule 13G filers (i.e., passive investors), the amendments shorten the initial filing deadline from 10 days to five business days after the date on which they acquire beneficial ownership of more than five percent of a covered class.
  • For investors who become ineligible to file Schedule 13G in lieu of Schedule 13D, the amendments shorten the initial filing deadline for the Schedule 13D from 10 days to five business days after the event that causes the ineligibility.
  • For all Schedule 13G filers, the amendments require that an amendment be filed 45 days after the calendar quarter rather than 45 days after the calendar year if, during that quarter, there were any material changes to the information previously reported rather than “any change” as previously required by the rules.
  • 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. Specifically, the amendments: 
    • Shorten the filing deadline for Schedule 13G amendments filed pursuant to Rule 13d-2(c) (i.e., for qualified institutional investors) to five business days after the end of the month in which beneficial ownership first exceeds 10 percent of a covered class, and thereafter upon any deviation by more than five percent of the covered class, with these requirements applying if the thresholds were crossed at any time during a month; and  
    • Revise the deadline for Schedule 13G amendments filed pursuant to Rule 13d-2(d) (i.e., for passive investors) to two business days after the date on which beneficial ownership exceeds 10 percent of a covered class, and thereafter upon any deviation by more than five percent of the covered class.

The amendments also extend the filing “cut-off” times for Schedules 13D and 13G from 5:30 p.m. to 10:00 p.m. Eastern time.

See the attachment to this overview for a chart summarizing the amended filing deadlines. 

Other Amendments

In addition to amending the filing deadlines, the SEC made a number of related amendments to the rules, as follows:

  • 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.
  • The amendments require that these filings use a structured, machine-readable data language (i.e., XML-based language). This requirement applies to all information disclosed on Schedules 13D and 13G (other than exhibits).
  • The amendments also clarify when acquisitions by a group member may be imputed to a group regulated as a person pursuant the Exchange Act. Specifically, the group will be deemed to have acquired beneficial ownership if any member of the group becomes the beneficial owner of additional equity securities in the same class beneficially owned by the group after the group’s formation. However, the group will not be deemed to have acquired beneficial ownership if, after the group’s formation, a member of the group becomes the beneficial owner of additional equity securities in the same class beneficially owned by the group through a sale by or transfer from another member of the group.

Adopting Release Additional Guidance

Rather than adopt a new rule, the SEC chose to offer guidance in the rule release regarding the application of the current Rule 13d-3 to cash-settled security derivatives, excluding security-based swaps (SBS). In the guidance, the SEC states, among other things, that under the current beneficial ownership reporting rules, holders of non-SBS cash-settled derivatives may be beneficial owners in certain instances, such as where facts and circumstances indicate that the holder of these securities may have voting or investment power or otherwise could be deemed to be a beneficial owner (e.g., as part of a plan or scheme to evade the reporting requirements; contractual arrangement providing exclusive or shared voting or investment power; or right to acquire underlying security within 60 days or acquiring with control purpose).

It also clarifies the standard for determining when two or more persons may be considered a group that is required to report beneficial ownership of all equity securities owned by each member of such group. Among other considerations, the determination depends on an analysis of all the relevant facts and circumstances and not solely on the presence or absence of an express agreement, as two or more persons may take concerted action or agree informally. The SEC also provided Q&A on the application of the current legal standard regarding formation of a group to certain shareholder engagement activities.

Compliance Dates

Filers are required to comply with the amendments on the following dates:

  • Schedule 13D filing deadline: February 5, 2024
  • Schedule 13G filing deadline: September 30, 2024
  • Compliance with the structured data requirement: December 18, 2024


Summary of New Schedule 13D and Schedule 13D Rules

Issue New Schedule 13D Deadlines New Schedule 13G Deadlines
Initial Filing Deadline Within five business days after acquiring beneficial ownership of more than 5% or losing eligibility to file on Schedule 13G.

See Rule 13d-1(a), (e), (f), and (g).

QIIs & Exempt Investors: 45 days after calendar quarter end in which beneficial ownership exceeds 5%. See Rule 13d-1(b) and (d). 

QIIs: Five business days after month-end in which beneficial ownership exceeds 10%. See Rule 13d-1(b). 

Passive Investors: Within five business days after acquiring beneficial ownership of more than 5%. See Rule 13d-1(c).
Amendment Triggering Event Same as current Schedule 13D: Material change in the facts set forth in the previous Schedule 13D. See Rule 13d-2(a).

All Schedule 13G Filers: Material change in the information previously reported on Schedule 13G. See Rule 13d-2(b). 

QIIs & Passive Investors: Same as current Schedule 13G: Upon exceeding 10% beneficial ownership or a 5% increase or decrease in beneficial ownership. See Rule 13d-2(c) and (d).
Amendment Filing
Deadline
Within two business days after the triggering event. See Rule 13d-2(a).

All Schedule 13G Filers: 45 days after calendar quarter-end in which a material change occurred. See Rule 13d-2(b).  

QIIs: Five business days after month-end in which beneficial ownership exceeds 10% or a 5% increase or decrease in beneficial ownership. See Rule 13d-2(c). 

Passive Investors: Two business days after exceeding 10% beneficial ownership or a 5% increase or decrease in beneficial ownership. See Rule 13d-2(d).
Filing
“Cut-Off” Time
10 p.m. Eastern time. See Rule 13(a)(4) of Regulation S-T. All Schedule 13G Filers: 10 p.m. Eastern time. See Rule 13(a)(4) of Regulation S-T.

 

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