Reminder: New Accelerated Filing Deadlines for Schedule 13G Become Effective on September 30, 2024

On October 10, 2023, the Securities Exchange Commission (SEC) adopted amendments to the rules regarding beneficial ownership reporting under Section 13(d) and 13(g) of the Securities Exchange Act of 1934. As noted in our prior client alert, the revised filing deadlines for Schedule 13G become effective on September 30, 2024.

The revised filing deadlines will require changes in practice for those stockholders who have customarily filed beneficial ownership reports and amendments on Schedule 13G. The revised deadlines are based on the exemption used by an investor permitting it to file a Schedule 13G instead of a Schedule 13D.

Passive Investors

A passive investor filing on Schedule 13G in reliance on Securities Exchange Act Rule 13d-1(c) is an investor that (1) has not acquired the securities with the purpose or effect of changing or influencing the control of the issuer; (2) is not a qualified institutional investor; and (3) is not, either directly or indirectly, a beneficial owner of 20% or more of the applicable class of securities. The following filing deadlines apply to passive investors:

Initial Filing – Within five business days after acquiring beneficial ownership of more than 5%

Amendments – (1) Forty-five days after calendar quarter-end in which a material change occurs; and (2) Two business days after exceeding 10% beneficial ownership or a 5% increase or decrease in beneficial ownership

Exempt Investors

An exempt investor filing on Schedule 13G in reliance on Securities Exchange Act Rule 13d-1(d) is an investor that holds beneficial ownership of more than five percent of a covered class but who has not made an acquisition of beneficial ownership subject to Section 13(d) of the Exchange Act. This is the exemption commonly used by an investor that acquired its securities prior to the issuer going public or that acquires no more than two percent of a class of securities during a 12-month period. The following deadlines apply to exempt investors:

Initial Filing – Forty-five days after calendar quarter-end in which beneficial ownership first exceeds 5%

Amendments – Forty-five days after calendar quarter-end in which a material change occurs

Qualified Institutional Investors

A qualified institutional investor filing on Schedule 13G in reliance on Securities Exchange Act Rule 13d-1(b) is an investor that (1) acquired securities in the ordinary course of business and not with the purpose or effect of changing or influencing the control of the issuer; (2) promptly notified any other person on whose behalf it holds securities exceeding 5% of the class of equity securities of any acquisition or transaction on behalf of that other person that might be reportable by that person under Section 13(d); and (3) is an institutional investor. The following deadlines apply to qualified institutional investors:

Initial Filing – The earlier of: (1) Forty-five days after calendar quarter-end in which beneficial ownership exceeds 5%; and (2) Five business days after month-end in which beneficial ownership exceeds 10%.

Amendments – (1) Forty-five days after calendar quarter-end in which a material change occurs; and (2) Five business days after month-end in which beneficial ownership first exceeds 10% or there is a 5% increase or decrease in beneficial ownership.

Changes Requiring Amendment

While the need to file an amendment to a Schedule 13G was previously triggered by any change in the information reported, under the new rule a material change will trigger the need to file an amendment. The SEC has not altered or further defined the “materiality” standard for this purpose, so existing interpretations of the standard continue to apply. In the case of the acquisition or disposition of additional securities, the SEC’s adopting release indicated that the one percent level specified in Securities Exchange Act Rule 13(d)-2(a) should “be instructive” for purposes of determining the need to file a Schedule 13G based on that acquisition or disposition.

Filing Cut-Off Time

To help meet these accelerated deadlines, the SEC has extended the filing cut-off time to 10:00 p.m. Eastern Time. There will no longer be a temporary hardship exemption to further extend the cut-off time, though filers may still request a filing date adjustment.

Other Important Reminder: Schedule 13D Deadline Changes

As noted in our prior client alert, the October 2023 SEC rule changes also affected Schedule 13D deadlines, beginning earlier this year. Schedule 13D initial filings must be made five business days after acquiring beneficial ownership of more than 5% of a covered class of securities or losing eligibility to file on Schedule 13G. Amendments to Schedule 13D filings must be made within two business days after a material change to previous 13D filings. The cut-off time revision noted above also applies to Schedule 13D filings.