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What is 'Schedule 13G'

Schedule 13G is an SEC form similar to the Schedule 13D used to report a party's ownership of stock that is over 5% of the company. Schedule 13G is shorter and requires less information from the filing party. Ownership of over 5% in a publicly traded stock is considered significant ownership, and therefore must be reported to the public.

BREAKING DOWN 'Schedule 13G'

To be able to file 13G instead of 13D, the party must own between 5 and 20% in the company. It must also be clearly understood that the party acquiring the stake in the company is only a passive investor and does not intend to exert control. If these criteria are not met, and if the size in the stake exceeds 20%, a 13D must be filed.

Any investor with over a 20% stake must automatically file 13D, regardless of whether the intention to exert control exists. Additionally, institutional investors may be subject to stricter requirements than individual investors. Such requirements may include certification that the shares were acquired as part of normal business operations while also confirming the intent is not to exert control.

Ownership of 5%

A schedule 13G may also be used in situations where the security holder owns over 5%, a Form 10 has recently been registered and no other securities in that class have been acquired. In this situation, the securities holder is not required to declare the shares were acquired without the intent to effect change. If any additional acquisitions have been made since the filing of Form 10, then a Schedule 13D is required.

If any pertinent information changes, the investor has 45 days after the closing of the calendar year to amend the information. The only expectation is if someone comes in possession of the securities due to being named a beneficiary, and with that action, is in possession of over a 10% stake or there is an increase of over 5%.

Beneficiaries

In the event a person acquires beneficial ownership of a 5 to 20% stake of a particular stock, he must file either Form 13D or 13G within 10 days of the acquisition. If multiple parties obtain ownership over the same securities, they can file jointly, providing all parties involved are eligible to file on the specified schedule. All parties must be properly identified and file in a timely fashion. Though joint filing is an option, individual filing is also permitted.

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