Initial filings
13D: A reporting person who is not eligible to use Schedule 13G must file a Schedule 13D within 10 days of such reporting personâs direct or indirect acquisition of beneficial ownership of more than 5% of a class of an issuerâs Section 13(d) Securities.
13G Exempt Investor: A reporting person that is an Exempt Investor is required to file its initial Schedule 13G within 45 days of the end of the calendar year in which the person exceeds the 5% threshold.
13G Qualified Institution: A reporting person that is a Qualified Institution also is required to file its initial Schedule 13G within 45 days of the end of the calendar year in which the person exceeds the 5% threshold.
NB. Since the 5% threshold for a Qualified Institution is calculated as of the end of a calendar year, a Qualified Institution that acquires directly or indirectly more than 5% of a class of an issuerâs Section 13(d) Securities during a calendar year, but as of December 31 has reduced its interest below the 5% threshold, will not be required to file an initial Schedule 13G.
A Qualified Institution that acquires direct or indirect beneficial ownership of more than 10% of a class of an issuerâs Section 13(d) Securities prior to the end of a calendar year must file an initial Schedule 13G within 10 days after the first month in which the person exceeds the 10% threshold.
13G Passive Investor: A reporting person that is a Passive Investor must file its initial Schedule 13G within 10 days of the date on which it exceeds the 5% threshold.
Amendments to Schedule 13D
If there has been any material change to the information in a Schedule 13D previously filed by a reporting person, the person must promptly file an amendment to such Schedule 13D.
A material change includes, without limitation, a reporting personâs acquisition or disposition of 1% or more of a class of the issuerâs Section 13(d) Securities, including as a result of an issuerâs repurchase of its securities.
A disposition that reduces a reporting personâs beneficial ownership interest below the 5% threshold, but is less than a 1% reduction, is not necessarily a material change that triggers an amendment to Schedule 13D. However, we suggest an amendment in such a circumstance to eliminate the reporting personâs filing obligations if the reporting person does not in the near term again expect to increase its ownership above 5%.
As a rule of thumb, âpromptlyâ is generally considered to be within 2 to 5 calendar days of the material change, depending on the facts and circumstances.
Amendments to Schedule 13G
Annual
If a reporting person previously filed a Schedule 13G and there has been any change to the information reported in such Schedule 13G as of the end of a calendar year, then an amendment to such Schedule 13G must be filed within 45 days of the calendar year end. A reporting person is not required to make an annual amendment to Schedule 13G if there has been no change since the previously filed Schedule 13G or if the only change results from a change in the personâs ownership percentage as a result of a change in the aggregate number of Section 13(d) Securities outstanding (e.g., due to an issuerâs repurchase of its securities).
Other than Annual (Qualified Institutions)
A reporting person that previously filed a Schedule 13G as a Qualified Institution reporting beneficial ownership of less than 10% of a class of an issuerâs Section 13(d) Securities, must file an amendment to its Schedule 13G within 10 days of the end of the first month such Qualified Institution is the direct or indirect beneficial owner of more than 10% of a class of the issuerâs Section 13(d) Securities. Thereafter, within 10 days after the end of any month in which the personâs direct or indirect beneficial ownership of such securities increases or decreases by more than 5% of the class of securities (computed as of the end of the month), the person must file an amendment to Schedule 13G.
NB. The majority of our clients fall under this category of qualified institutional investor.
Other than Annual (Passive Investors)
A reporting person that previously filed a Schedule 13G as a Passive Investor must promptly file an amendment any time it directly or indirectly acquires more than 10% of a class of an issuerâs Section 13(d) Securities. Thereafter, the reporting person must file an amendment to Schedule 13G promptly after its direct or indirect beneficial ownership of such securities increases or decreases by more than 5%.
Summary of Schedule 13D and Schedule 13G Filing Obligations
| Issue | Schedule 13D | Schedule 13G |
|---|---|---|
| Person Required to File: | Any person acquiring more than 5% of an equity security. Rule 13d-1(a). | Qualified Institutional Investors: Defined as a person who acquired the securities in the ordinary course of business and not with the purpose nor with the effect of changing or influencing the control of the issuer, and such person is (A) a broker or dealer registered under Section 15 of the Exchange Act; (B) a bank as defined in Section 3(a)(6) of the Exchange Act; (C) an insurance company as defined in Section 3(a)(19) of the Exchange Act; (D) an investment company registered under Section 8 of the Investment Company Act of 1940; (E) an investment adviser registered under Section 203 of the Investment Advisers Act of 1940 or under the laws of any state; (F) an employee benefit plan or pension fund that is subject to ERISA, a state or local governmental employee benefit plan or an endowment fund; (G) a parent holding company or control person, provided that the parent or control person must not own directly, or indirectly through an ineligible entity or affiliates, more than 1% of the subject companyâs stock and must not be seeking to change or influence control of the subject company; (H) a savings association as defined in Section 3(b) of the Federal Deposit Insurance Act; (I) a church plan that is excluded from the definition of the Investment Company Act of 1940 by Section 3(c)(14); (J) a non-U.S. institution that is the functional equivalent of any of the institutions listed above, so long as the non-U.S. institution is subject to a regulatory scheme that is substantially comparable to the regulatory scheme applicable to the equivalent U.S. institution; or (K) a group, provided that all the members are persons specified in (A) through (J). Rule 13d-1(b). Exempt Investors: Persons holding more than 5% of an equity security who are not subject to, or whose acquisitions are exempt from Section 13(d). Rule 13d-1(d). Passive Investors: Any person acquiring more than 5% but less than 20% of an equity security and did not acquire such securities with a purpose or effect of changing or influencing control of the issuer or in a transaction having that effect. Rule 13d-1(c). |
| Initial Filing: | Within 10 calendar days after the acquisition. Rule 13d-1(a). | Qualified Institutional Investors: Within 45 calendar days after the calendar year in which the person holds more than 5% as of the year end, or within 10 calendar days after the end of the first month in which the personâs beneficial ownership exceeds 10% of the class of equity securities computed as of the end of the month. Rule 13d1(b)(2). Exempt Investors: Within 45 calendar days after the calendar year in which the person becomes obligated to file. Rule 13d-1(d). Passive Investors: Within 10 calendar days after the acquisition. Rule 13d-1(c). |
| Amendments: | File promptly to reflect any material change including a change in investment purpose. An acquisition or disposition of beneficial ownership of securities equal to 1% or more of the class is deemed to be a material change. Rule 13d-2(a). | All Filers: Within 45 calendar days after the end of the calendar year to report any change in the information. Rules 13d-2(b), (c) and (d). Qualified Institutional Investors: In addition to the requirement stated above, within 10 calendar days after the end of the first month in which the personâs beneficial ownership exceeds 10% of the class computed as of the end of the month, and thereafter within 10 calendar days of the end of any month in which the person's beneficial ownership increases or decreases more than 5% computed as of the end of the month. Rule 13d-1(b)(2) and 13d-2(c). Passive Investors: Within 45 calendar days after the end of the calendar year to report any change in the information. In addition, an amendment must be filed promptly upon the person's beneficial ownership exceeding 10% of the class and thereafter promptly upon the person's beneficial ownership increasing or decreasing more than 5%. Rule 13d-2(a). |