Written by Blake Baron and Gabriel Miranda

On October 10, 2023, the U.S. Securities and Exchange Commission (SEC) approved amendments to shorten the deadlines for initial and amended beneficial reports filed on Schedules 13D and 13G under the Exchange Act of 1934, as amended, among other changes, which incorporates concerns and considerations raised by comments in response to the initial proposed amendments.[1]

In an effort to update reporting requirements to provide more timely and complete information to the market, SEC Chairman Gary Gensler stated that “[t]oday’s adoption updates rules that first went into effect more than 50 years ago … 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.”[2]

The approved amendments will become effective 90 days after the date of publication in the Federal Register. Compliance with the revised Schedule 13G filing deadlines will be required beginning on September 30, 2024. Compliance with the structured data requirement for Schedules 13D and 13G will be required on December 18, 2024. Compliance with the other rule amendments will be required upon their effectiveness.

The main aspects of the approved amendments are discussed further in detail below, and the table set forth in Annex A at the end of this alert provides a summary to the current Schedule 13G and Schedule 13D filing deadlines and SEC’s approved changes.

Changes in Schedule 13D and 13G Filing Requirements

Initial Filing Deadline Changes

Currently, beneficial owners that acquire more than 5% of a class of registered voting equity securities must file a Schedule 13D within 10 days after such event, and thereafter “promptly” file any amendments to report material changes.

Under the approved amendments, Rules 13d-1(a) was amended to shorten the filing deadline for the initial Schedule 13D to within five business days after the date on which a person acquires beneficial ownership of more than five percent of a covered class of securities, rather than the originally proposed five-calendar day deadline.[3] Similarly, Rules 13d-1(e), (f) and (g) were amended to shorten the filing deadline for the initial Schedule 13D required to be filed by certain persons who become ineligible to report on Schedule 13G in lieu of a Schedule 13D to five business days after the occurrence of the event that causes the ineligibility.

Further, Rules 13d-1(b) and (d) that provide the filing deadlines for the initial Schedule 13G – which deadlines depend on whether the person files as a qualified institutional investor (QII)[4], exempt investor[5], or passive investor[6] – were amended to shorten the deadline for initial Schedule 13G filings for QIIs and exempt investors to within 45-days after the end of the calendar quarter in which a beneficial ownership exceeds five percent of a covered class of securities, compared to the current deadline of 45-days after calendar year-end in which beneficial ownership exceeds five percent. Additionally, Rule 13d-1(b)(2) was amended to require that such initial Schedule 13G filing be within five business days (rather than the current 10 calendar days) after the end of the first month in which the QII’s beneficial ownership exceeds 10 percent of a covered class of securities, computed as of the last day of the month. Finally, Rule 13d-1(c) was amended to require that passive investors file their initial Schedule 13G within five business days after the date on which the passive investor acquired beneficial ownership of more than five percent of a covered class of securities.

Amendments to Schedules 13D and 13G

Under the current regime, Section 13(d)(2) requires that an amendment must be filed if any material change occurs in the facts set forth in the statement filed; however, Section 13(d)(2) does not provide for a specific deadline by which such amendment must be filed, stating instead that the amendment must be filed with the SEC “promptly.”[7]

The amended Rules 13d-2(a) and (b) revise the Schedule 13D and 13G amendment filing deadlines. Specifically, Schedule 13D amendment filings will have a filing deadline of two business days after the date of a material change, and a Schedule 13G will have a filing deadline of 45 days after calendar quarter-end. And, Rule 13d-2(b) was further amended to require an amendment to Schedule 13G to be filed only if a “material change” occurs (replacing the current rule text that requires an amendment upon the occurrence of “any change” in the facts previously reported).[8]

In line with the other approved changes, Rules 13d-2(c) and (d) were also amended to shorten the filing deadline for Schedule 13G amendments. Rule 13d-2(c) was amended to shorten the deadline for Schedule 13G amendments filed in accordance with such provision to five business days after the end of the month in which beneficial ownership first exceeds 10 percent of a covered class of securities, and subsequently upon any deviation by more than five percent of the covered class of securities, with these requirements being applicable if the thresholds are crossed at any time during a month; and, Rule 13d-2(d) was similarly amended to shorten the deadline for Schedule 13G amendments filed pursuant to such provision to two business days after the date on which beneficial ownership exceeds 10 percent of a covered class of securities, and subsequently upon any deviation by more than five percent of the covered class of securities.

Requirements for Group Formation

To better align Rule 13d-5 with Sections 13(d)(3) and (g)(3), Rules 13d-5(b)(1)(iii) and (b)(2)(ii) were adopted substantially as proposed.[9] Meaning, under the amended rules, once the collective beneficial ownership among group members exceeds five percent of a covered class of securities, any acquisition of covered securities after the date such group is formed by a group member will  be attributed to the group as a whole.

Additionally, the proposed Rules 13d-5(b)(1)(i), (b)(1)(ii) and (b)(2)(i), which were originally proposed to provide clarity on whether a group is formed if a person shares information about an upcoming Schedule 13D filing that the person is or would be required to make, were not adopted. Rather, the SEC stated that they would instead provide guidance as to the “application of the existing legal standard established in Sections 13(d)(3) and 13(g)(3) with respect to the formation of a group.”[10]

Disclosure of Derivative Securities

The SEC also amended Rule 13d-101 to expressly state that derivative contracts, arrangements, understandings, and relationships with respect to an issuer’s securities, including cash-settled security-based swap and other derivatives which are settled exclusively in cash, would need to be disclosed under Item 6 of Schedule 13D in order to comply with Section 13(d)(1) and Rule 13d-1(a). The SEC also eliminated the “including but not limited to” language in Item 6 that currently precedes the itemization of the instruments or arrangements covered to remove any implication that additional interests may need to be disclosed. In its final rules release, the SEC stated that this amendment is intended to “eliminate any ambiguity regarding the scope of the disclosure obligations of Item 6 of Schedule 13D as to derivative securities, including with respect to any derivative not originating with, or offered or sold by, the issuer, such as a cash-settled option or [security-based swap].”[11]

Not Adopted Rules

The SEC did not adopt the proposed amendments to Rule 13d-3(e) to deem certain holders of cash-settled derivative securities[12] as beneficial owners of a covered class of security. Instead, the SEC provided guidance to discuss how, under the current Rule 13d-3, persons using these types of derivative securities may already be subject to regulation as beneficial owners. Further, many of the proposed amendments to Rules 13d-5 and 13d-6 were not adopted, with the SEC instead providing guidance on the application of the current legal standard found in Sections 13(d)(3) and 13(g)(3) to certain common types of shareholder engagement activities.

Other Changes

The SEC amended a couple provisions from Regulation S-T to allow for Schedules 13D and 13G, and any amendments, to be filed on or before 10 p.m. Eastern Time and have that filing to be deemed to have been filed on the same business day.

The SEC also approved the proposed structured data requirement for Schedules 13D and 13G to be filed using a structured, machine-readable data language, meaning that reporting persons will be able to, at their option, submit filings directly to EDGAR in 13D/G-specific XML or use a web-based reporting application developed by the SEC that will generate the Schedule in 13D/G-specific XML in connection with the submission of the filing to EDGAR.

Please contact the MSK Corporate & Business Transactions Department to discuss how we can help you comply with the new SEC rules and obligations discussed in this alert.

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Annex A

Issue	Current Schedule 13D	New Schedule 13D	Current Schedule 13G	New Schedule 13G
Initial Filing Deadline	Within 10 days after acquiring beneficial ownership of more than 5% or losing eligibility to file on Schedule 13G. Rules 13d-1(a), (e), (f), and (g).	Within five business days after acquiring beneficial ownership of more than 5% or losing eligibility to file on Schedule 13G. Rules 13d-1(a), (e), (f), and (g).	QIIs & Exempt Investors: 45 days after calendar year-end in which beneficial ownership exceeds 5%. Rules 13d-1(b) and (d).   QIIs: 10 days after month-end in which beneficial ownership exceeds 10%. Rule 13d-1(b).   Passive Investors:  Within 10 days after acquiring beneficial ownership of more than 5%. Rule 13d-1(c).	QII & Exempt Investors: 45 days after calendar quarter-end in which beneficial ownership exceeds 5%. Rules 13d-1(b) and (d).   QIIs: Five business days after month-end in which beneficial ownership exceeds 10%. Rule 13d-1(b).   Passive Investors: Within five business days after acquiring beneficial ownership of more than 5%. Rule 13d-1(c).
Amendment Triggering Event	Material change in the facts set forth in the previous Schedule 13D. Rule 13d-2(a).	Same as current Schedule 13D: Material change in the facts set forth in the previous Schedule 13D. Rule 13d-2(a).	All Schedule 13G Filers: Any change in the information previously reported on Schedule 13G. Rule 13d-2(b).   QIIs & Passive Investors: Upon exceeding 10% beneficial ownership or a 5% increase or decrease in beneficial ownership. Rules 13d-2(c) and (d).	All Schedule 13G Filers: Material change in the information previously reported on Schedule 13G. Rule 13d-2(b).   QIIs & Passive Investors: Same as current Schedule 13G: Upon exceeding 10% beneficial ownership or a 5% increase or decrease in beneficial ownership. Rules 13d-2(c) and (d).

Issue	Current Schedule 13D	New Schedule 13D	Current Schedule 13G	New Schedule 13G
Amendment Filing Deadline	Promptly after the triggering event. Rule 13d-2(a).	Within two business days after the triggering event. Rule 13d-2(a).	All Schedule 13G Filers: 45 days after calendar year-end in which any change occurred. Rule 13d-2(b).   QIIs: 10 days after month-end in which beneficial ownership exceeded 10% or there was, as of the month-end, a 5% increase or decrease in beneficial ownership. Rule 13d-2(c).   Passive Investors: Promptly after exceeding 10% beneficial ownership or a 5% increase or decrease in beneficial ownership. Rule 13d-2(d).	All Schedule 13G Filers: 45 days after calendar quarter-end in which a material change occurred. Rule 13d-2(b).   QIIs: Five business days after month-end in which beneficial ownership exceeds 10% or a 5% increase or decrease in beneficial ownership. Rule 13d-2(c).   Passive Investors: Two business days after exceeding 10% beneficial ownership or a 5% increase or decrease in beneficial ownership. Rule 13d-2(d).
Filing “Cut-Off” Time	5:30 p.m. eastern time. Rule 13(a)(2) of Regulation S-T	10 p.m. eastern time. Rule 13(a)(4) of Regulation S-T.	All Schedule 13G Filers: 5:30 p.m. eastern time. Rule 13(a)(2) of Regulation S-T.	All Schedule 13G Filers: 10 p.m. eastern time. Rule 13(a)(4) of Regulation S-T.

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[1] https://www.sec.gov/files/rules/proposed/2022/33-11030.pdf

[2] https://www.sec.gov/news/press-release/2023-219?utm_medium=email&utm_source=govdelivery

[3] https://www.sec.gov/files/rules/proposed/2022/33-11030.pdf

[4] Pursuant to Rule 13d-1(b).

[5] Pursuant to Rule 13d-1(c).

[6] Pursuant to Rule 13d-1(d).

[7] See 17 CFR § 240.13d-2.

[8] See id.

[9] The proposed Rule 13d-5(b)(1)(iii) provides that a group under Section 13(d)(3) is deemed to have acquired beneficial ownership of equity securities of a covered class if any member of the group becomes the beneficial owner of additional equity securities of such covered class after the date of the group’s formation. Similarly, proposed Rule 13d-5(b)(2)(ii) contains nearly identical language, with conforming changes to address circumstances in which a member of a group under Section 13(g)(3) becomes the beneficial owner of additional equity securities of a covered class after the date of the group’s formation.

[10] https://www.sec.gov/files/rules/final/2023/33-11253.pdf

[11] See id.

[12] As defined in 17 CFR 240.16a-1(c).