Shareholder Disclosure – Schedule 13D and 13G

As firms expand into new markets, the task of monitoring shareholder filing requirements has become increasingly demanding.

Investment managers and funds that have discretion over or beneficially own more than certain amounts of US equity securities registered under the US Securities Exchange Act of 1934 may have to report these holdings to the SEC.  All markets around the globe agree that shareholder disclosure requirements are good for the industry.  The problem is that each jurisdiction operates independently. Therefore this has led to an unlimited number of ways in which the requirements have been implemented.  Keeping up with the various regulations in different countries is challenging and onerous.  Timing of the filings may differ along with the thresholds. 

Shareholding Disclosure regulations - including Schedule 13D and Schedule 13G, may be necessary to file in order to avoid enforcement actions by the SEC.  Failure to file the required forms and schedules on a timely basis can lead to reputational damage and business disruption on one end of the spectrum, or fines and imprisonment on the more extreme end of foreign jurisdictions.

What is Shareholder Disclosure exactly?  According to Investopedia, it is “the act of releasing all relevant information pertaining to a company that may influence an investment decision.”  It may sound subjective, but the primary purpose is to provide transparency and support an orderly marketplace, and there are several strict regulations in place to ensure that it happens.

Unfortunately, several drivers have made taming the shareholder disclosure beast a tough feat for even the best compliance teams.  Not only have regulations grown over time, they’ve become more fluid and complex.  Investment managers struggle to monitor across portfolios and share classes to calculate thresholds.   Instruments, such as American Depositary Receipts (ADRs), warrants, and dual listings can follow different reporting obligations. Virtually every market has different filing requirements, and cross-border trading has made monitoring the reporting requirements across a global book a challenging task to say the least.

I recently had the pleasure of joining the Shareholder Disclosure panel at the Fidessa Buy-side Conference held in October.  The panel discussed the background to these regulations, existing approaches, how to meet today’s challenges, and the future state of shareholder disclosure.

I welcome you to contact me if you want to hear more about the panel discussion or discuss how Shareholder Disclosure regulations can impact your compliance operations.