On April 28th, the SEC reopened the comment period for its February 2022 proposal, Modernization of Beneficial Ownership Reporting. The agency also announced that its Division of Economic and Risk Analysis (DERA) released a memorandum that provides supplemental data and analysis related to the proposed amendments’ economic effects. The proposal would amend certain rules that govern beneficial ownership reporting under Exchange Act Sections 13D and 13G, which would enhance disclosure requirements, reduce information imbalances, and provide more timely information to meet the needs of investors and the market.
More specifically, the proposed amendments are intended to:
consider holders of certain cash-settled derivative securities as beneficial owners of the reference equity securities and clarify the disclosure requirements of Schedule 13D with respect to derivative securities
update the filing deadlines for initial and amended beneficial ownership reports filed on Schedules 13D and 13G
clarify and affirm the operation of the regulation as applied to two or more persons that form a group under the Securities Exchange Act of 1934 and provide new exemptions to permit such persons to communicate and consult with each other, jointly engage issuers, and execute certain transactions without being subject to regulation as a group
amend provisions regarding the date on which Schedules 13D and 13G filings are considered to have been made
extend the filing cut-off times for Schedules 13D and 13G from 5:30 p.m. to 10:00 p.m. Eastern time to facilitate adjusting to the shortened deadlines
require that Schedules 13D and 13G be filed using a structured, machine-readable data language
Supplemental Data and Analysis
The original comment period for the proposed amendments closed on April 11, 2022, and after reviewing and considering the feedback received, additional data, and current research on beneficial ownership and activism, DERA staff prepared the memorandum to provide supplemental analysis related to the proposed rules’ economic effects. The memorandum provides:
additional background and baseline data on Schedule 13D and 13G filings
additional analysis of potential harms to certain selling shareholders under the existing filing deadline
further investigation regarding potential effects on activism that may result from the proposed change to the initial Schedule 13D filing deadline
Further details on the proposed rules and amendments are available on the SEC’s Modernization of Beneficial Ownership Reporting fact sheet on sec.gov. For additional information on the proposal’s comment period and instructions on how to respond, see the proposed rule on the SEC’s website.
Interested parties may submit feedback on the reopening release during the public comment period, which will remain open for 30 days following publication in the Federal Register or June 27, 2023, whichever is later.