SEC Proposes Amendments To Beneficial Ownership Reporting Rules

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Recently, there has been a significant push from shareholders to increase transparency, and the Securities and Exchange Commission (SEC), has noticed. Recently, the SEC proposed changes to their beneficial ownership reporting requirements. The changes will take place as amendments to the Exchange Act of 1934, and they will reduce asymmetries in the market and address when certain filings need to be filed.

The main goals of the amendments are to shorten the deadlines regarding the filing of Schedule 13D and 13G, while also clarifying how certain derivatives are meant to be treated when it comes to beneficial ownership reporting.

The Proposed Amendments From the SEC

One of the biggest driving forces behind the proposed amendments is beneficial ownership reporting requirements given the technological advances, particularly those with the filing system with regard to EDGAR. Now, thanks to advances in technology, it is possible for companies to file their documents more quickly than they did in the past. The biggest concern related to current deadlines is that the public does not necessarily have access to information as quickly as it should. The delay in information can potentially harm investors, who might want access to that information to make decisions regarding their investments.

There are certain situations where financial entities have up to 10 days before they are required to file these documents with the SEC. This creates a discrepancy between shareholders and beneficial owners or investors. Because this information has the potential to change the way the markets move, the SEC and shareholders believe that this information can, and should, be filed more quickly. These amendments will reduce the filing timeline and clarify how certain derivatives might contribute to the current threshold (five percent) before reporting requirements are triggered.

The Changes Proposed By the SEC

Several specific amendments have been proposed by the SEC. They include:

  • The timeline required to file paperwork related to Schedule 13D will be shortened from 10 days to 5 days.
  • Filing deadlines for beneficial ownership reports related to 13G will be shortened.
  • The new proposed amendments would also require files submit filings using iXBRL.
  • Any changes or amendments to this paperwork must be filed within a single business day.

In addition, the SEC will institute new rules that will change the scope of filing requirements, increasing the number and frequency with which reports related to financial securities derivatives will be filed. Companies will have to file a greater number of reports in a short amount of time, but the SEC believes that because of technological advances, it will be easier for businesses to do so. The end result is that investors will have access to more information that they need to make decisions regarding their investments.

Work With Colonial Filings To Stay on Top of Paperwork

If these rules go into effect, transparency will increase in the market, allowing shareholders to make decisions faster. Colonial Filings can help beneficial owners and all SEC filers stay on top of their Schedule 13 reporting requirements. Contact us today to learn more about how we can help you.

SEC Proposes Amendments To Beneficial Ownership Reporting Rules
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