/>iThe Securities and Exchange Commission’s (SEC) new accelerated Schedule 13G filing deadlines will become effective on Sept. 30, 2024. The new filing deadlines are part of the beneficial ownership “modernizing” rule amendments adopted by the SEC late last year.
The changed Schedule 13G deadlines apply to both initial filings and amendments, and affect all types of investors that use Schedule 13G to report greater than 5 percent beneficial ownership of public company securities. Most notably, the new rules replace the traditional annual Schedule 13G updating amendment process with a quarterly amendment regime. Given that the tightened deadlines take effect only a few weeks from now, private fund managers and other investors who file on Schedule 13G should ensure they are prepared for the new reporting environment.
The new Schedule 13G filing deadlines are summarized here in chart form, including comparisons to the prior rules.
All Categories of Schedule 13G Filers Are Affected
The filing deadlines taking effect on Sept. 30 will affect each of the three categories of investors that use Schedule 13G to report greater than 5 percent beneficial ownership of a covered class of equity securities:
1. “Qualified institutional investors” (QIIs), who report pursuant to Rule 13d-1(b)
2. “Passive investors,” who report pursuant to Rule 13d-1(c)
3. “Exempt investors,” who report pursuant to Rule 13d-1(d)
New Schedule 13G Filing Deadlines Effective Sept. 30, 2024
| Type of Filing | Prior Requirement | New Requirement |
|
Initial Filing – QII Rule 13d-1(b)(2) |
Within 45 calendar days after end of calendar year in which beneficial ownership exceeds 5% as of last day of such year; or
Within10 calendar days after end of month in which beneficial ownership exceeds 10% as of last day of such month. |
Within 45 calendar days after end of calendar quarterin which beneficial ownership exceeds 5% as of last day of such quarter; or Within 5 business days after end of month in which beneficial ownership exceeds 10% as of last day of such month. |
|
Initial Filing – Passive Rule 13d-1(c) |
Within 10 calendar days after acquiring more than 5% beneficial ownership. | Within 5 business days after acquiring more than 5% beneficial ownership. |
|
Initial Filing – Exempt Investor Rule 13d-1(d) |
Within 45 calendar days after end of calendar year in which beneficial ownership exceeds 5% as of last day of such year. | Within 45 calendar days after end of calendar quarter in which beneficial ownership exceeds 5% as of last day of such quarter. |
|
Interim Amendment – QII Rule 13d-2(c) |
Within 10 calendar days after end of month in which beneficial ownership exceeds 10% as of last day of such month; and Thereafter, within 10 calendar daysafter end of month in which beneficial ownership increased or decreased by more than 5% of class as of last day of such month. |
Within 5 business days after end of month in which beneficial ownership exceeds 10% as of last day of such month; and Thereafter, within 5 business days after end of month in which beneficial ownership increased or decreased by more than 5% of class as of last day of such month. |
|
Interim Amendment – Passive Investor Rule 13d-2(d) |
Promptly after acquiring more than 10% beneficial ownership; and Thereafter, promptlyafter increasing or decreasing beneficial ownership by more than 5% of class. |
Within 2 business days after acquiring more than 10% beneficial ownership; and Thereafter, within 2 business days after increasing or decreasing beneficial ownership by more than 5% of class. |
|
Quarterly Amendment – All Rule 13d-2(b) |
Within 45 calendar days after end of calendar year if, as of the end of that calendar year, there are any changes in the information reported in prior Schedule 13G. | Within 45 calendar days after end of calendar quarter if, as of the end of that calendar quarter, there are any material changes in the information reported in prior Schedule 13G. |
Source: Barnes & Thornburg
Quarterly Amendment to Report a Material Change
Traditionally, any investor that had a Schedule 13G on file was required to file an annual updating amendment within 45 days after year-end if, as of the last day of the year, there had been “any change” in the information reported in the investor’s most recent Schedule 13G. This annual amendment obligation has now become a quarterly one and the “any change” amendment trigger has been supplanted by an “any material change” standard.
Beginning on Sept. 30, 2024, any investor with a Schedule 13G on file must file an updating amendment within 45 days after the end of the calendar quarter if, as of the last day of that quarter, there has been any material change in the information reported in the investor’s existing Schedule 13G. Thus, if an investor that filed a Schedule 13G before September 30, 2024 concludes that a material change to its existing disclosure has occurred as of September 30, 2024, the investor will have to file a Schedule 13G amendment not later than November 14, 2024.
What is a “Material” Change?
The SEC did not specifically define what constitutes a “material change” for purposes of the new quarterly Schedule 13G amendment requirement. Rather, the SEC stated that materiality is a “familiar, established concept” under the federal securities laws, and noted various other references to materiality that a Schedule 13G filer may consider when determining whether a quarterly amendment has been triggered.
The SEC first pointed to Rule 12b-2, which provides that the term “material,” when used to qualify a requirement for the furnishing of information in an SEC report, limits the required information to “those matters to which there is a substantial likelihood that a reasonable investor would attach importance.” The SEC also cited the U.S. Supreme Court’s well-known TSC. v. Northway standard, under which a fact is material if a reasonable investor would view it as significantly altering the “total mix” of available information.
The SEC also stated that Rule 13d-2(a) – which deems the acquisition or disposition of beneficial ownership of 1 percent or more of a covered class to constitute a material change in the Schedule 13D amendment context – is “equally instructive” in the Schedule 13G quarterly amendment context.
EDGAR Cut-Off Time
The SEC has relaxed the daily EDGAR filing cutoff time in recognition of the challenges posed by the new Schedule 13G deadlines. As of Sept. 30, the cutoff for Schedule 13G filings will be 10 p.m. ET, meaning that a Schedule 13G filed by that time on a given day will be recorded by EDGAR as filed on that day. This contrasts with the SEC’s standard 5:30 p.m. ET cutoff, which historically applied to Schedule 13G filings.
Next Steps for Managers
The soon-to-be-accelerated filing deadlines will require careful practical attention by investment managers who report on Schedule 13G. Managers should assess their internal policies and procedures, as well as their working relationships with outside counsel and other service providers, to ensure that accurate Schedule 13G disclosure can be prepared, appropriately reviewed, and timely filed under the newly compressed timeframes.
In particular, the manager’s traditional January/February project of considering which existing Schedules 13G require an updating amendment will now be a quarterly endeavor, with the first quarterly amendment deadline falling on Nov. 14, 2024. Managers should plan to allocate the necessary internal and external resources to this new quarterly work stream, in part because it will coincide with quarterly Form 13F deadlines.
