New C&DIs on Types of Shareholder Engagement Could Cause Loss of Schedule 13G Eligibility
Today, the Staff in the Division of Corporation Finance at the Securities and Exchange Commission published one new and one revised Compliance and Disclosure Interpretation (C&DI) under Regulation 13D-G. The C&DIs address circumstances in which a greater-than-5% shareholder’s engagement with an issuer’s management could cause the shareholder to be deemed to hold the subject securities […]
Amy R. Dreisiger, Joseph A. Hearn, and Dalia O. Blass are Partners at Sullivan & Cromwell LLP. This post is based on a Sullivan & Cromwell memorandum by Ms. Dreisiger, Mr. Hearn, Ms. Blass, H. Rodgin Cohen, Robert W. Downes, and Eric M. Diamond.
Today, the Staff in the Division of Corporation Finance at the Securities and Exchange Commission published one new and one revised Compliance and Disclosure Interpretation (C&DI) under Regulation 13D-G. The C&DIs address circumstances in which a greater-than-5% shareholder’s engagement with an issuer’s management could cause the shareholder to be deemed to hold the subject securities with a “purpose or effect of changing or influencing control of the issuer” and, therefore, lose eligibility to report its beneficial ownership on Schedule 13G and require it to report on the more disclosure-intensive Schedule 13D. Although the extent to which the C&DIs are expected to result in a change in practice by filers is unclear, institutional investors may wish to review their approach to interactions with companies in which they have reportable investments.
