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SEC adopts amendments modernizing beneficial ownership reporting

On Behalf of | Oct 18, 2023 | Securities and Compliance

The Securities and Exchange Commission announced last week that it has adopted amendments to the rules governing beneficial ownership reporting. The final rules are aimed at improving transparency and providing more timely information for shareholders and the market, the SEC said.

The amendments, approved by a 4-1 vote, involved rules under Sections 13(d) and 13(g) of the Securities Exchange Act of 1934. The SEC’s action updates Regulation 13D-G requiring market participants to provide more timely information on their positions to meet the needs of investors in today’s markets.

The newly adopted amendments will:

–Shorten the deadlines for initial and amended Schedule 13D and 13G filings;
–Clarify the Schedule 13D disclosure requirements with respect to derivative securities;
–Require that Schedule 13D and 13G filings be made using a structured, machine readable data language.

The commission said that the amendments to filing deadlines for Schedules 13D and G are appropriate considering the advances in the communications and technology used by market professionals since the time frames were first established in 1968

“Today’s adoption updates rules that first went into effect more than 50 years ago. Frankly, these deadlines from half a century ago feel antiquated,” said SEC Chair Gary Gensler. “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.”

Under Regulation 13D-G and Exchange Act Sections 13(d) and 13(g), along with Regulation 13D-G, investors who beneficially owns more than 5 percent of a covered class of equity securities are required 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.

The adopting release is published on and will be published in the Federal Register, and the amendments will become effective 90 days after publication in the register.

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