On September 30, 2024, the revised Schedule 13G filing deadlines became effective. In this article, we provide an overview of the new regime and provide a comparison with the corresponding notification deadlines in the EU and UK.
On October 10, 2023, the US Securities and Exchange Commission (SEC) adopted amendments to Sections 13(d) and 13(g) of the Securities Exchange Act of 1934 (Securities Act), which, among other things, accelerate the filing deadlines for Schedules 13D and 13G. In announcing these changes, SEC Chairman Gary Gensler stated that the old reporting requirements did not reflect the current pace of information in the modern capital markets, and the changes to the Schedule 13D and 13G reporting rules would “reduce information asymmetries.” While the amendments and revised Schedule 13D deadline became effective 90 days after publication of the amendments in the Federal Register, compliance with the revised Schedule 13G filing deadlines will be required beginning September 30, 2024. Refer to our previous client alert on this topic for more background.
CHANGES TO SCHEDULE 13D FILING DEADLINES
Sections 13(d) and 13(g) require persons or groups who own or acquire beneficial ownership of more than 5% of certain classes of “equity securities” registered under the Securities Act to file ownership reports with the SEC. Prior to September 30, 2024, a Schedule 13G report was generally required to be filed annually, within 45 days of the end of the calendar year in which the investor’s beneficial ownership exceeded 5% of a class of securities or, for certain passive investors, within 10 calendar days of the acquisition of more than 5% of a class of securities.
As of September 30, 2024, the Schedule 13G filing deadlines will change as follows:
- For certain qualified institutional investors filing under Rule 13d-1(b) (such as registered broker-dealers, registered investment advisers or registered investment companies) and exempt investors (investors filing under Rule 13d-1(d) because they own more than 5% but have not made an acquisition subject to Section 13(d), such as founders and other pre-initial public offering investors), the amendments have shortened the initial filing deadline from 45 calendar days after the calendar year-end to 45 calendar days after the end of the calendar quarter in which the investor beneficially acquired more than 5% of the covered class.
- For passive investors (investors who own less than 20% and do not hold with the purpose or effect of changing or influencing control of the issuer) filing under Rule 13d-1(c), the amendments shorten the initial filing deadline from 10 calendar days to 5 business days.
- The amendments require that an amendment be filed 45 calendar days after the calendar quarter in which a material change occurred rather than 45 calendar days after the calendar year in which any change occurred.
- Upon exceeding 10% beneficial ownership of a covered class, the amendments require that (1) qualified institutional investors file an amendment within 5 business days after the end of the month in which they cross the 10% threshold and (2) passive investors file an amendment within 2 business days of acquiring more than 10%.
- The amendments also extend the Electronic Data Gathering, Analysis and Retrieval (EDGAR) submission deadline for Schedule 13G filings to the SEC, adjusting it from 5:30 pm to 10:00 pm (ET).
EU AND UK MAJOR SHAREHOLDING NOTIFICATION DEADLINES
The equivalent requirements to Sections 13(d) and 13(g) in the EU and UK are the major shareholding notification rules of EU Directive 2004/109/EC (Transparency Directive), as implemented into national legislation of EU Member States and the UK (remaining applicable despite Brexit).
Under the Transparency Directive, persons acquiring, or disposing of, shares of an issuer whose shares are admitted to trading on an EU-regulated stock exchange, must notify the issuer and the competent authority of the relevant EU Member State or, in the UK, the Financial Conduct Authority (FCA) if, as a result of the acquisition or disposal, their ownership would reach, exceed, or fall below, the thresholds of 5%, 10%, 15%, 20%, 25%, 30%, 50% or 75%.
The Transparency Directive provides that the notification shall be made “promptly”, but no later than 4 trading days after the date on which the person learns of the acquisition or disposal. This period may, however, be further limited by national legislation of each EU Member State. Before Brexit, the UK utilized this possibility when implementing the Transparency Directive into the Disclosure Guidance and Transparency Rules sourcebook of the FCA Handbook. Specifically, while the FCA requires notification within 4 trading days in the case of non-UK issuers, this period is limited to 2 trading days for all other issuers.
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