Schedule 13G

Schedule 13G is a simpler version of the more complex Schedule 13D Schedule 13D Schedule 13D is an SEC filing that individuals or groups must submit when they acquire more than 5% ownership in a publicly traded company's voting stock. The filing reveals who the buyer is, why they bought the shares, and what they plan to do with their ownership stake—making it especially important for activist hedge funds. form. Investors can use this streamlined form when they own more than 5% of a company's stock but don't plan to influence how the company operates. The form recognizes that some large investors are simply making passive investments rather than trying to gain control.

The SEC made major changes to Schedule 13G rules in 2024. The new rules require faster filing and more frequent updates. These changes help ensure that other investors and the public get important information about stock ownership more quickly in today's fast-moving markets.

Three types of investors can use Schedule 13G, and each has different rules about when to file. The key requirement is that investors must be "passive"—meaning they bought the stock as an investment, not to change how the company is run or to gain control.

The SEC provided new guidance in February 2025 about what counts as "passive." Investors can still talk with company management about their views or voting decisions. However, if they pressure management to make specific changes or threaten to withhold support for directors unless management acts, they may need to use the more detailed Schedule 13D form instead.

Qualified institutional investors include registered investment advisers Registered investment adviser (RIA) A registered investment adviser (RIA) is a hedge fund manager or other investment adviser that has registered with the SEC or state securities regulators. These advisers must follow comprehensive rules including fiduciary duties, compliance requirements, and regular examinations. and similar professionals. These investors can use Schedule 13G when they buy stocks as part of their regular business activities, without trying to control the companies. When their holdings exceed 5% of a company, they must notify the people whose money they're managing about any significant transactions.

The 2024 rule changes made filing deadlines much faster. Passive investors must now file their initial Schedule 13G report within five business days after they acquire more than 5% of a company's shares. This is much quicker than the previous ten-day requirement and brings the timing closer to Schedule 13D requirements while keeping the simpler disclosure format.

Passive investors must also update their filings more often. They need to file amendments within 45 days after the end of each quarter when something important changes. This replaced the old system where updates were only required once per year. Additionally, they must file amendments within two business days after their ownership crosses 10%, and then again within two business days whenever their ownership increases or decreases by more than 5%.

Professional investors like investment advisers Registered investment adviser (RIA) A registered investment adviser (RIA) is a hedge fund manager or other investment adviser that has registered with the SEC or state securities regulators. These advisers must follow comprehensive rules including fiduciary duties, compliance requirements, and regular examinations. have different deadline rules that reflect their ongoing portfolio management work. They must file their initial reports within 45 days after the end of the quarter in which their ownership exceeds 5%. However, if their ownership crosses 10% before the quarter ends, they must file within five business days after the end of that month.

These institutional investors must update their Schedule 13G filings within 45 days after each quarter ends when material changes occur. For positions above 10%, they need to file amendments within five business days after any month-end when their ownership increases or decreases by more than 5%.

The 2024 changes introduced quarterly update requirements for all Schedule 13G filers, replacing the old annual reporting system. "Material changes" trigger the need for amendments, though the SEC didn't set specific thresholds for what counts as material beyond existing securities law standards.

The SEC suggested that the 1% ownership change standard used for Schedule 13D amendments provides helpful guidance for Schedule 13G filers, but it's not a hard rule. Investors must evaluate whether changes are material using standard federal securities law definitions, considering both the size of the change and other factors that might make it significant to other investors.

When investors who file Schedule 13G decide they no longer want to remain passive, they must switch to filing Schedule 13D within ten days. During the ten-day transition periodA designated time frame during which investors must comply with specific restrictions when switching between Schedule 13G and Schedule 13D filing requirements. after this change in intent, these investors face restrictions: they cannot vote their shares or buy more stock in the company or its controlling shareholders.

Investors can switch back to Schedule 13G filing once their investment approach becomes passive again. However, investors who initially file Schedule 13D cannot later switch to Schedule 13G reporting, even if their investment strategy becomes passive.

Any passive investor whose ownership reaches or exceeds 20% of a company's shares must switch to Schedule 13D reporting within ten days. This mandatory conversion applies regardless of the investor's intent, because the SEC believes that owning such a large stake automatically creates potential control implications.

During the transition period, which can last up to twenty days, these investors face the same restrictions as other converting filers: no voting rights and no additional purchases of company stock or stock in controlling shareholders. To return to Schedule 13G eligibility, ownership must drop below 20% and the investor must demonstrate genuine passive intent.

SEC enforcement activity regarding beneficial ownership reporting became more aggressive after the 2024 rule changes. The agency brought multiple enforcement actions in late 2024 for Schedule 13D timing violations. The February 2025 guidance on shareholder engagement suggests the SEC will continue to focus on ensuring investors use the correct form—Schedule 13D versus Schedule 13G.

The SEC extended the EDGARElectronic Data Gathering, Analysis, and Retrieval system used by the SEC for electronic filing and access to corporate information. filing deadline to 10:00 PM Eastern Time for Schedule 13G filings, which gives investors more flexibility to meet deadlines. However, the agency eliminated temporary hardship exemptions, so investors need to plan more carefully to avoid late filings. Regular Schedule 13G filers should implement quarterly review procedures to identify and report material changes on time.