Tag Archives: Section 13(g)

Section 13(d) Filings and Section 13(g) Filings

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Section 13(d) of the Securities Act of 1934 requires any person who beneficially owns 5% or more of a class of equity securities of a publicly traded company to file a report with the SEC within 10 days of reaching the 5% ownership threshold.  SEC Rule 13d-1 provides more detailed guidance on the reporting requirements.

Generally those persons who are subject to this rule will need to file a Schedule 13D (discussed in greater detail below) with the SEC.  Because Schedule 13D is fairly detailed (the SEC estimates that it will take 14.5 hours to complete the form), the SEC has provided an alternate form and alternate reporting procedures for those persons who acquire 5% but who are generally not purchasing the securities with the purpose nor with the effect of changing or influencing the control of the issuer.

Schedule 13D

The following discussion is from the SEC website and can be found here.

Schedule 13D is commonly referred to as a “beneficial ownership report.” The term “beneficial owner” is defined under SEC rules. It includes any person who directly or indirectly shares voting power or investment power (the power to sell the security).

When a person or group of persons acquires beneficial ownership of more than 5% of a voting class of a company’s equity securities registered under Section 12 of the Securities Exchange Act of 1934, they are required to file a Schedule 13D with the SEC. (Depending upon the facts and circumstances, the person or group of persons may be eligible to file the more abbreviated Schedule 13G in lieu of Schedule 13D.)

Schedule 13D reports the acquisition and other information within ten days after the purchase. The schedule is filed with the SEC and is provided to the company that issued the securities and each exchange where the security is traded. Any material changes in the facts contained in the schedule require a prompt amendment. The schedule is often filed in connection with a tender offer.

You can find the Schedules 13D for most publicly traded companies in the SEC’s EDGAR database. You can learn how to use EDGAR to find information about companies. You can find an HTML version of the Schedule and download a PDF version for easier printing.

Schedule 13G Filing Categories

As discussed above, there is an alternative to the Schedule D filing requirement if the hedge fund manager falls within certain categories desicribed below.  If the manager does fall within these categories, the manager can file the less onerous Schedule 13G.

Rule 13d-1(b) – provides that Schedule G can be filed, in lieu of filing Schedule D, within 45 days of the end of the calendar year in which the 5% threshold was exceeded if: (i) generally the person has not acquired the securities with any purpose, or with the effect of, changing or influencing the control of the issuer and (ii) the person is one of a number of enumerated persons (i.e. broker-dealers, registered investment advisors, investment companies, etc).

Rule 13d-1(c) – provides that Schedule G can be filed, in lieu of filing Schedule D, within 10 days of the date which the 5% threshold was exceeded if: (i) generally the person has not acquired the securities with any purpose, or with the effect of, changing or influencing the control of the issuer; (ii) the person is not a certain enumerated person; and (iii) the person does not directly or indirectly own 20% or more of the class of equity securities.

Rule 13d-1(d) – requires Schedule G be filed within 45 days after the end of the calendar year in which the 5% threshold was exceeded if the person meets certain requirements.

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Bart Mallon, Esq. runs hedge fund law blog and has written most all of the articles which appear on this website.  Mr. Mallon’s legal practice is devoted to helping emerging and start up hedge fund managers successfully launch a hedge fund.  If you are a hedge fund manager who is looking to start a hedge fund, or if you have questions about the Schedule D or Schedule G filing process, please call Mr. Mallon directly at 415-296-8510.

Section 13(g) of the Securities Exchange Act of 1934

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Section 13(g) – Statement of equity security ownership

(1) Any person who is directly or indirectly the beneficial owner of more than 5 per centum of any security of a class described in subsection (d)(1) shall send to the issuer of the security and shall file with the Commission a statement setting forth, in such form and at such time as the Commission may, by rule, prescribe–

(A) such person’s identity, residence, and citizenship; and

(B) the number and description of the shares in which such person has an interest and the nature of such interest.

(2) If any material change occurs in the facts set forth in the statement sent to the issuer and filed with the Commission, an amendment shall be transmitted to the issuer and shall be filed with the Commission, in accordance with such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

(3) When two or more persons act as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding, or disposing of securities of an issuer, such syndicate or group shall be deemed a “person” for the purposes of this subsection.

(4) In determining, for purposes of this subsection, any percentage of a class of any security, such class shall be deemed to consist of the amount of the outstanding securities of such class, exclusive of any securities of such class held by or for the account of the issuer or a subsidiary of the issuer.

(5) In exercising its authority under this subsection, the Commission shall take such steps as it deems necessary or appropriate in the public interest or for the protection of investors (A) to achieve centralized reporting of information regarding ownership, (B) to avoid unnecessarily duplicative reporting by and minimize the compliance burden on persons required to report, and (C) to tabulate and promptly make available the information contained in any report filed pursuant to this subsection in a manner which will, in the view of the Commission, maximize the usefulness of the information to other Federal and State agencies and the public.

(6) The Commission may, by rule or order, exempt, in whole or in part, any person or class of persons from any or all of the reporting requirements of this subsection as it deems necessary or appropriate in the public interest or for the protection of investors.