The Securities and Exchange Commission July 14 issued a new Compliance and Disclosure Interpretation clarifying the interplay between a shareholder’s eligibility to file a Schedule 13G and qualifying for a Hart-Scott-Rodino passive investor exemption.
The C&DI comes just two days after activist investor ValueAct settled claims with the Department of Justice that it had violated the HSR passive investor exemption.
Under Exchange Act Rule 13d-1, an investor may file a short-form Schedule 13G rather than the long-form Schedule 13D if the shareholder has acquired the securities without the intent to influence the issuing company. This, of course, is a very similar test to the one set out in the HSR passive investor exemption.
The SEC’s new C&DI poses the following question:
Does the fact that a shareholder is disqualified from relying on this HSR Act exemption due to its efforts to influence management of the issuer on a particular topic, by itself, disqualify the shareholder from initially reporting, or continuing to report, beneficial ownership on Schedule 13G?
The short answer? “No.”
Not qualifying for the HSR exemption does not alone preclude a shareholder from filing a Schedule 13G. However, the SEC makes clear that “the subject matter of the shareholder’s discussions with the issuer’s management may be dispositive,” along with the context in which those discussions occur. The SEC also provides a few examples of when a shareholder would or wouldn’t be Schedule 13G-eligible.
The C&DI is available here.
For more on ValueAct’s settlement, see this blog.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)