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Schedule 13G



Definition

Schedule 13G is a filing with the Securities and Exchange Commission (SEC) used by institutional investors and certain qualified individuals to report their beneficial ownership of a U.S. public company’s stock. This filing is required when an investor acquires 5% or more of a company’s outstanding equity securities. Schedule 13G differs from Schedule 13D, with the former generally being for passive investors, and the latter for active investors intending to influence the company’s management.

Phonetic

The phonetic pronunciation of the keyword “Schedule 13G” is: “SKEH-joohl THUR-teen-JEE”

Key Takeaways

  1. Schedule 13G is a filing with the United States Securities and Exchange Commission (SEC) that is required under the Securities Exchange Act of 1934 for qualified institutional investors. It is used to report passive beneficial ownership of more than 5% of a company’s stock.
  2. The form must be submitted within 45 days of the end of the calendar year in which the investor exceeds the 5% ownership threshold. However, certain investors may need to file within 10 days of acquisition, depending on their specific situation.
  3. Schedule 13G is generally intended for investors who hold a passive stake in a company and do not seek to influence the company’s management or control. Active investors or those seeking to exert influence must file Schedule 13D instead.

Importance

Schedule 13G is an essential financial document in the business and finance world because it serves as an alternative filing for passive investors who own a significant interest in a publicly traded company. Specifically, investors who hold at least 5% of a company’s outstanding shares must file either a Schedule 13D or 13G with the Securities and Exchange Commission (SEC). The emphasis on passive investors is crucial, as Schedule 13G is designed for those who do not seek to influence the company’s management or control its operations. This filing requirement enhances transparency, alerts other investors and the company about significant ownership interests, and ensures regulatory compliance. Overall, Schedule 13G plays a vital role in safeguarding the interests of both the investors and the company while maintaining a healthy, transparent investment environment.

Explanation

Schedule 13G is an essential document in the finance and business world, commonly used as a way to promote transparency between different stakeholders in the market. The primary purpose of a Schedule 13G is to provide detailed information regarding the ownership of a publicly traded company’s stock. When an individual or institutional entity acquires beneficial ownership of more than 5% of a company’s equity securities, they are required to file a Schedule 13G with the United States Securities and Exchange Commission (SEC). This disclosure allows investors, regulators, and the company itself to be aware of significant changes in stock ownership and identify any potential concentrations of control, which might influence the company’s strategic direction, corporate governance, or stock price. The use of a Schedule 13G serves various functions and caters to different objectives for different stakeholders. For existing and prospective investors, this filing instills confidence and aids in making more informed investment decisions. The transparency of significant stock ownership changes allows them to better understand the company’s shareholder landscape, assess potential risks, and evaluate the company’s stability. From a regulatory perspective, Schedule 13G maintains a standard of financial disclosure, enabling pertinent authorities to keep track of and monitor the potential impact of large institutional investors on stock prices, corporate strategy, and market stability. Ultimately, Schedule 13G serves as a crucial instrument for promoting information sharing, fair investment opportunities, and a more balanced and regulated financial marketplace.

Examples

Schedule 13G is a form filed with the U.S. Securities and Exchange Commission (SEC) by investors who acquire significant ownership (5% or more) in public companies. The form serves to inform the SEC and the public about the investor’s stake and intentions. Here are three real-world examples related to the term Schedule 13G: 1. BlackRock, Inc. – In February 2021, BlackRock, Inc., a global investment management company, filed a Schedule 13G for its ownership stake in Tesla, Inc. According to the form, BlackRock held approximately 49.2 million shares, equivalent to a 5.1% ownership stake in the electric vehicle manufacturer. BlackRock filed the form to disclose its passive stake and report its ownership interest to the SEC. 2. Vanguard Group – In February 2019, The Vanguard Group, one of the world’s largest investment management companies, filed a Schedule 13G for its ownership stake in Beyond Meat, Inc. The filing revealed Vanguard’s ownership of 7.4% of the company’s outstanding shares, which amounts to over 2.7 million shares of the plant-based meat substitute producer. Vanguard filed the Schedule 13G as a passive investor with no intentions of influencing the company’s management. 3. Berkshire Hathaway – In August 2020, Berkshire Hathaway, the multinational conglomerate led by Warren Buffett, filed a Schedule 13G for its ownership stake in Barrick Gold Corporation. According to the filing, Berkshire Hathaway acquired 20.9 million shares, representing an ownership stake of roughly 8.97% in the gold mining company. This filing provided transparency to the SEC and the public about Berkshire Hathaway’s investment in the company.

Frequently Asked Questions(FAQ)

What is a Schedule 13G filing?
Schedule 13G is a filing submitted to the U.S. Securities and Exchange Commission (SEC) by institutional and passive investors who acquire a significant stake (5% or more) in a publicly traded company. It serves as an alternative to the more detailed Schedule 13D and is intended to disclose relevant information about the ownership and intentions of the filing party.
When is a Schedule 13G filing required?
A Schedule 13G filing is required when a qualified investor acquires ownership of 5% or more of the voting class of a company’s equity securities. Filing deadlines are determined by the type of investor: institutional investors must file within 45 days of the year-end, while passive investors should file within 10 days after crossing the 5% ownership threshold.
Who can file a Schedule 13G instead of a Schedule 13D?
Qualified institutional investors and passive investors with no intention of influencing the company’s management can file a Schedule 13G. Institutional investors include banks, brokers, dealers, insurance companies, and investment advisers, while passive investors are those with no intent to control or sway the company.
What are the main differences between Schedule 13G and Schedule 13D?
Schedule 13D is a more comprehensive filing, containing detailed information about the investor’s background, objectives, and plans related to the acquired securities. Schedule 13G is a shorter and simpler filing, designed for passive and institutional investors, as they are not seeking to influence the company’s management. Schedule 13G filers are subject to less stringent reporting requirements.
Can a Schedule 13G filer switch to a Schedule 13D?
Yes, if an investor initially files a Schedule 13G but later plans to actively participate in the company’s management or exert control, they must switch to a Schedule 13D. The investor is required to file an amendment to the Schedule 13G, explaining the reason for the change and then file a Schedule 13D within 10 days of the event triggering the change.
Where can I find filed Schedule 13G filings?
Schedule 13G filings are available for public review on the U.S. Securities and Exchange Commission (SEC) website through their Electronic Data Gathering, Analysis, and Retrieval system (EDGAR). Simply search for the company name or ticker symbol and look for documents designated as “13G” or “SC 13G.”

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