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What is 'Schedule 13G'?

Schedule 13G is a Securities and Exchange Commission (SEC) form similar to Schedule 13D used to report a party's ownership of stock that is over 5% of a company's total stock. 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 file SEC 13G instead of SEC 13D, the party must own between 5 and 20% of a company's stock. It also must be 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 of the stake exceeds 20%, form 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. These requirements may include certification that the shares were acquired as part of normal business operations while also confirming that 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 that the shares were acquired without the intent to effect change. If any additional acquisitions have been made since the filing of SEC 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 an individual acquires the securities by becoming a beneficiary and has obtained possession of a 10% stake or more or there is an increase of over 5%.

Beneficiaries

If an individual acquires beneficial ownership of a 5 to 20% stake of a particular stock, that individual 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 must file in a timely fashion. Although joint filing is an option, individual filing is also permitted.

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