In October 2023, the U.S. Securities and Exchange Commission (SEC) approved final rules amending the beneficial ownership reporting requirements under Sections 13(d) and 13(g) of the Securities Exchange Act of 1934 (Exchange Act). Among other things, the final rules modified the filing deadlines for Schedule 13D and Schedule 13G filings. For more information on this rulemaking, please see our Client Alert.
Compliance with the new Schedule 13D filing deadlines was required as of February 5, 2024. The SEC provided a transition period for the new Schedule 13G filing deadlines and filers will be required to comply with the revised filing deadlines as of September 30, 2024. A chart of the new Schedule 13G filing deadlines is set forth below, but we wanted to highlight one of the common Schedule 13G amendment filings that will be impacted.
Schedule 13G may be filed by an “exempt investor,” which generally is a person that beneficially owns more than 5 percent of a class of the company’s equity securities prior to the company going public. When the company goes public, those persons remain exempt investors so long as they do not acquire more than 2 percent of the same class of the company’s equity securities within a 12-month period.[1] For example, founders or a venture capital firm that beneficially owned more than 5 percent of the company’s equity securities prior to the company’s initial public offering would be exempt investors and permitted to file a Schedule 13G following the initial public offering so long as they did not acquire more than 2 percent of the company’s common stock in any preceding 12-month period.
Under current Schedule 13G rules, exempt investors are required to file a Schedule 13G amendment within 45 calendar days after the end of each calendar year, reporting beneficial ownership as of December 31. No amendment is required if the only change in information was a change in beneficial ownership percentage resulting from a change in the number of outstanding shares.
Under the new Schedule 13G rules, exempt investors with a Schedule 13G (or amendment thereto) on file will need to consider whether, as of the end of the day on September 30, 2024 (and each calendar quarter-end thereafter), there was a material change in the information that the filer previously reported on Schedule 13G (or amendment thereto). If so, the filer must file an amendment within 45 days after the end of the calendar quarter. No amendment is required if the only change in information was a change in beneficial ownership percentage resulting from a change in the aggregate number of outstanding shares. Of note, in the adopting release, the SEC stated that “the language in Rule 13d-2(a), including the statement that “[a]n acquisition or disposition of beneficial ownership of securities in an amount equal to one percent or more of the class of securities shall be deemed ‘material,’” is equally instructive for purposes of determining what changes are material” for Schedule 13G amendments.
All persons eligible to file Schedule 13G should carefully review these new filing deadlines and, where applicable, ensure that they are filing their initial Schedule 13G filings or amendments thereto on a timely basis. Notably, the final rules extended the EDGAR filing deadline for Schedule 13D and Schedule 13G filings from 5:30 p.m. Eastern Time to 10:00 p.m. Eastern Time. In addition, all Schedule 13D and Schedule 13G filers should prepare to make required filings in XML format no later than December 18, 2024.
[1] See Rule 13d-1(d) and Section 13(d)(6) of the Exchange Act.
