Tag: beneficial ownership reporting
SEC approves changes to modernize beneficial ownership reporting [updated]
[This post revises and updates my earlier post primarily to reflect the contents of the adopting release.]
Last week, without an open meeting, the SEC adopted rule amendments governing beneficial ownership reporting under Exchange Act Sections 13(d) and 13(g), updating Reg 13D-G to “require market participants to provide more timely information on their positions to meet the needs of investors in today’s financial markets.” Commissioner Hester Peirce dissented. In essence, the amendments accelerate the filing deadlines for Schedules 13D and 13G. The adopting release also clarifies the disclosure requirements of Schedule 13D with respect to derivative securities and provides guidance on the definition of “group” formation. In addition, the amendments require that these Schedules be filed in XBRL, and to that end, the SEC made a number of technical changes to Reg S-T. The adopting release also discusses the changes that had been proposed, but that, in response to comment, were not adopted, including proposed changes to the rules that would have deemed certain holders of cash-settled derivative securities to be beneficial owners of the reference covered class, and proposed rule amendments that would have addressed formation of a group and provided two new exemptions. Instead, the SEC is amending Schedule 13D to clarify that interests in derivative securities must be disclosed and, in the adopting release, provides guidance on those two topics. According to SEC Chair Gary Gensler, the “adoption updates rules that first went into effect more than 50 years ago. Frankly, these deadlines from half a century ago feel antiquated….In our fast-paced markets, it shouldn’t take 10 days for the public to learn about an attempt to change or influence control of a public company. I am pleased to support this adoption because it updates Schedules 13D and 13G reporting requirements for modern markets, ensures investors receive material information in a timely way, and reduces information asymmetries.”
SEC approves changes to modernize beneficial ownership reporting
Yesterday, without an open meeting, the SEC adopted rule amendments governing beneficial ownership reporting under Exchange Act Sections 13(d) and 13(g), updating Reg 13D-G to “require market participants to provide more timely information on their positions to meet the needs of investors in today’s financial markets.” Commissioner Hester Peirce dissented. In essence, the amendments accelerate the filing deadlines for Schedules 13D and 13G. The adopting release also provides guidance on the definition of “group” formation. According to SEC Chair Gary Gensler, “[t]oday’s adoption updates rules that first went into effect more than 50 years ago. Frankly, these deadlines from half a century ago feel antiquated….In our fast-paced markets, it shouldn’t take 10 days for the public to learn about an attempt to change or influence control of a public company. I am pleased to support this adoption because it updates Schedules 13D and 13G reporting requirements for modern markets, ensures investors receive material information in a timely way, and reduces information asymmetries.”
SEC reopens comment period for proposal to amend beneficial ownership reporting rules
In February last year, the SEC proposed to amend the complex beneficial ownership reporting rules—most notably, the timing of Schedules 13D and 13G filings. In the press release announcing the proposed changes in beneficial ownership reporting, SEC Chair Gary Gensler described the amendments as an update designed to modernize reporting requirements for today’s markets, including reducing “information asymmetries,” and addressing “the timeliness of Schedule 13D and 13G filings.” The proposal was on the SEC’s most recent agenda with a target date of April 2023 for final action. But so far, no action taken. Then, on Friday, the SEC announced that it was reopening the comment period for this proposal until June 27, 2023, or until 30 days after the date of publication of the reopening release in the Federal Register, whichever is later. Why? This memorandum from the Division of Economic and Risk Analysis may be the answer. The SEC believes that the information in the memo “has the potential to be informative for purposes of further evaluating the Proposed Amendments.”
SEC’s Investor Advisory Committee discusses human capital and beneficial ownership
On Wednesday, the SEC’s Investor Advisory Committee held a jam-packed meeting to discuss, among other matters, human capital disclosure and the SEC’s proposal on Schedule 13D beneficial ownership. Wait, didn’t this Committee just have a meeting in June about human capital disclosure, part of the program about non-traditional financial information? (See this PubCo post.) Yes, but, as the moderator suggested, Wednesday’s program was really a “Part II” of that prior meeting, expanding the discussion from accounting standards for human capital disclosure to now consider other labor-related performance data metrics that may be appropriate for disclosure. The Committee also considered whether to make recommendations in support of the SEC’s proposals regarding cybersecurity disclosure and climate disclosure.
SEC proposes to modernize beneficial ownership reporting [updated]
[This post revises and updates my earlier post primarily to reflect the contents of the proposing release.]
The SEC has proposed to amend the complex beneficial ownership reporting rules. In the press release announcing the changes in beneficial ownership reporting, SEC Chair Gary Gensler described the amendments as an update designed to modernize reporting requirements for today’s markets, including reducing “information asymmetries,” and addressing “the timeliness of Schedule 13D and 13G filings.” Currently, according to Gensler, investors “can withhold market moving information from other shareholders for 10 days after crossing the 5 percent threshold before filing a Schedule 13D, which creates an information asymmetry between these investors and other shareholders. The filing of Schedule 13D can have a material impact on a company’s share price, so it is important that shareholders get that information sooner. The proposed amendments also would clarify when and how certain derivatives acquired with control intent count towards the 5 percent threshold, clarify group formation, and create related exemptions.” Here is the fact sheet, and here is the proposing release. Consistent with the apparently new comment period formula, the public comment period for each proposal will be open for 60 days following publication of the proposing release on the SEC’s website (April 11, 2022) or 30 days following publication in the Federal Register, whichever period is longer.
SEC proposes to modernize beneficial ownership reporting and to amend the whistleblower program
Yesterday, without first holding an open meeting, the SEC posted proposals related to changes in beneficial ownership reporting and changes to the whistleblower program. In the press release announcing the changes in beneficial ownership reporting, SEC Chair Gary Gensler described the amendments as an update designed to modernize reporting requirements for today’s markets, including reducing “information asymmetries,” and addressing “the timeliness of Schedule 13D and 13G filings.” Currently, according to Gensler, investors “can withhold market moving information from other shareholders for 10 days after crossing the 5 percent threshold before filing a Schedule 13D, which creates an information asymmetry between these investors and other shareholders. The filing of Schedule 13D can have a material impact on a company’s share price, so it is important that shareholders get that information sooner. The proposed amendments also would clarify when and how certain derivatives acquired with control intent count towards the 5 percent threshold, clarify group formation, and create related exemptions.” The fact sheet indicates that the current deadlines for filing these initial Schedules have not been updated since 1968 (Schedule 13D) and 1977 (Schedule 13G). A lot has changed since the debut of “Hair” on Broadway and the release of “Hey Jude”—but how come platform shoes are still a thing?—so perhaps a reassessment is in order. Here is the fact sheet, and here is the proposing release.
You must be logged in to post a comment.