The U.S. Securities and Exchange Commission (SEC) has adopted amendments to rules governing beneficial ownership that will require active investors to file a Schedule 13D notice within five business days of crossing the 5% ownership threshold, down from 10 days.
According to a press release from the securities regulator, amendments to Schedule 13Ds must now be filed within two business days. Passive investors filing on Schedule 13G will also see their reporting window shortened, with the length determined by the type of filer.
“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.”
And according to the final rules release by the SEC, investors filing on Schedule 13D will be required to disclose interests in all derivative securities, including cash-settled derivative securities, that use the target company’s equity security as a reference security.
Further, the adopting release provides guidance on the current legal standard governing when two or more persons may be considered a group for the purposes of determining whether the beneficial ownership threshold has been met.
The amendments also require that 13D and 13G filings use a structured, machine-readable data language that will make it easier for other investors to access, compile and analyze information presented.
These amendments will be effective 90 days after publication in the Federal Register, the SEC stated.