SEC Extends Comment Period on Proposal to Expand Beneficial Ownership Reporting Requirements

The SEC extended the comment period on proposed amendments to rules governing beneficial ownership reporting until June 27, 2023. The SEC provided a supplemental analysis on the proposal's economic impact (see here).

As previously covered, the proposal would amend Exchange Act Sections 13(d) ("Reports by Persons Acquiring More Than Five per Centum of Certain Classes of Securities") and 13(g) ("Statement of Equity Security Ownership") to:

• accelerate filing deadlines for Schedules 13D and 13G beneficial ownership reports;
• expand the application of Regulations 13D and 13G to certain derivative securities;
• clarify the circumstances in which two or more persons have formed a "group" that would be subject to the beneficial ownership reporting obligations;
• exempt certain persons from being subject to regulation as a "group"; and
• require the filing of Schedules 13D and 13G to be done through a "structured, machine-readable data language."

The SEC stated that the proposed rules "would improve transparency and provide more timely information for shareholders and the market."

In response to previous comments, the SEC Division of Economic and Risk Analysis issued a memorandum which includes supplemental analyses on (i) the economic impact of the proposed amendments to Schedule 13D and 13G filings and (ii) potential effects associated with activist campaigns and potential harms of certain selling shareholders under the existing filing deadline.