SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 240
[Release No. 34-39538; File No. S7-16-96
International Series - 1111]
RIN 3235-AG81
Amendments to Beneficial Ownership Reporting Requirements
AGENCY: Securities and Exchange Commission
ACTION: Final Rules.
SUMMARY: The Securities and Exchange Commission is today adopting
amendments to its rules relating to the reporting of beneficial ownership
in publicly-held companies. These amendments make the short-form Schedule
13G available, in lieu of Schedule 13D, to all investors beneficially
owning less than 20 percent of the outstanding class that have not acquired
and do not hold the securities for the purpose of or with the effect of
changing or influencing the control of the issuer of the securities. The
purposes of the amendments are to improve the effectiveness of the
beneficial ownership reporting scheme and to reduce the reporting
obligations of passive investors.
EFFECTIVE DATE: The amendments are effective February 17, 1998.
FOR FURTHER INFORMATION CONTACT: Dennis O. Garris, Chief, Office of
Mergers and Acquisitions, Division of Corporation Finance, Securities and
Exchange Commission at (202) 942-2920, 450 Fifth Street N.W., Washington,
D.C. 20549.
======END OF PAGE 1======
SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission
("Commission") is adopting amendments to Regulation 13D-G<(1)> and
Schedules 13D and 13G.<(2)> In addition, the Commission is adopting
conforming amendments to Rule 16a-1<(3)> under the Securities Exchange
Act of 1934 ("Exchange Act").
I. EXECUTIVE SUMMARY
Today, for the first time, the Commission is permitting certain large
shareholders to use the short-form Schedule 13G, rather than the long-form
Schedule 13D, to report accumulations and changes in stock holdings. This
expanded eligibility to file on Schedule 13G applies only to persons not
seeking to acquire or influence "control" of the issuer and who own less
than 20 percent of the class of securities ("Passive Investor").<(4)>
The existing reporting scheme imposed unnecessary disclosure obligations on
persons whose acquisitions do not affect the control of issuers. The
amendments adopted today will reduce the reporting obligations of these
Passive Investors. The amendments also will improve the effectiveness of
the beneficial ownership reporting scheme. The reduced number of Schedule
13D filings will allow the marketplace, as well as the staff of the
Commission, to focus more quickly on acquisitions involving the potential
to change or influence control.
<(1)> Rules 13d-1, 13d-2, 13d-3, and 13d-7 [17 CFR 240.13d-1,
240.13d-2, 240.13d-3, and 240.13d-7].
<(2)> 17 CFR 240.13d-101 and 240.240.13d-102.
<(3)> 17 CFR 240.16a-1.
<(4)> See fn. 9, infra.
======END OF PAGE 2======
Since a control purpose reflects the state of mind of a filing person
and there are incentives to disclose less information, the Commission is
imposing some safeguards on this new class of short-form filers:
* Initial Schedule 13G must be filed within 10 days (instead of
year end);
* Prompt amendments are required every time the Passive Investor
acquires more than an additional five percent;
* Loss of Schedule 13G-eligibility occurs when Passive Investor
acquires 20 percent or more of the class; and,
* If the person no longer passively holds their shares or the
person acquires 20 percent or more of the class, a Schedule 13D
is due within ten days and the person is not permitted to vote
the shares or acquire more shares during the period of time
beginning from the change in investment purpose or the
acquisition of 20 percent or more until ten days after the
Schedule 13D is filed.
The Commission also is adopting related and clarifying amendments
including the simplification of the Schedule 13G dissemination requirements
to reflect the ready availability of those reports on the Commission's
EDGAR system. Schedules 13G will no longer be required to be sent to the
exchanges, since all Schedules 13D and 13G must now be filed electronically
with the Commission.<(5)>
<(5)> Schedules 13D and 13G are not required to be filed
electronically with respect to securities of foreign
private issuers. See Note to paragraph (c)(4) to 17
CFR 232.901.
======END OF PAGE 3======
II. AMENDMENTS TO REGULATION 13D-G
A. Expansion of the Class of Investors Eligible to Report on
Schedule 13G
The Commission proposed the amendments adopted today on July 3,
1996.<(6)> The amendments are being adopted substantially as proposed
with some important modifications. In addition to the two existing
categories of Schedule 13G filers ("Qualified Institutional
Investors"<(7)> and "Exempt Investors"<(8)>), today's amendments
<(6)> Exchange Act Release No. 37403 (July 7, 1996)
("Reproposing Release"). The comment letters, as well
as a summary of the comments, are available from the
Commission's Public Reference Room (File No. S7-16-96).
<(7)> The institutional investors include a broker or dealer
registered under Section 15(b) of the Exchange Act [15
U.S.C. 78o(b)], a bank as defined in Section 3(a)(6) of
the Exchange Act [15 U.S.C. 78c(a)(6)], an insurance
company as defined in Section 3(a)(19) of the Exchange
Act [15 U.S.C. 78c(a)(19)], an investment company
registered under Section 8 of the Investment Company
Act of 1940 [15 U.S.C. 80a-8], an investment adviser
registered under Section 203 of the Investment Advisers
Act of 1940 [15 U.S.C. 80b-1 et seq.], an employee
benefit plan or pension fund that is subject to the
provisions of the Employee Retirement Income Security
Act of 1974 [codified principally in 29 U.S.C. 1001-
1461], and related holding companies and groups
(collectively, "institutional investors"). Rule 13d-
1(b)(1)(ii) [17 CFR 240.13d-1(b)(1)(ii)].
<(8)> The term "Exempt Investors" refers to persons holding
more than five percent of a class of subject securities
at the end of the calendar year, but who have not made
an acquisition subject to Section 13(d). For example,
persons who acquire all their securities prior to the
issuer registering the subject securities under the
Exchange Act are not subject to Section 13(d) and
persons who acquire not more than two percent of a
class of subject securities within a 12-month period
are exempted from Section 13(d) by Section 13(d)(6)(B),
but in both cases are subject to Section 13(g).
Section 13(d)(6)(A) exempts acquisitions of subject
securities acquired in a stock-for-stock exchange which
(continued...)
======END OF PAGE 4======
create a third category ("Passive Investors"),<(9)> significantly
expanding the classes of persons eligible to file on the short form. Under
the amendments, all Passive Investors are permitted to use the short-form
Schedule 13G.<(10)> Passive Investors choosing to report on Schedule
13G will file that schedule within 10 calendar days after acquiring
beneficial ownership of more than five percent of a class of subject
securities. Persons unable or unwilling to certify that they do not have a
disqualifying purpose or effect because, for example, the possibility
exists that they may seek to exercise or influence control, would be
ineligible to file a Schedule 13G and would be required to file a Schedule
13D.<(11)> Qualified Institutional Investors remain eligible to file
<(8)>(...continued)
is registered under the Securities Act of 1933.
<(9)> The term "Passive Investors" is used in this release to
refer to shareholders beneficially owning more than
five percent of the class of subject securities and who
can certify that the subject securities were not
acquired or held for the purpose of and do not have the
effect of changing or influencing the control of the
issuer of such securities and were not acquired in
connection with or as a participant in any transaction
having such purpose or effect. See Rule 13d-1(c) and
revised Item 10 of Schedule 13G. Shareholders that are
unable to certify to this effect are considered to
have, for purposes of this release, a "disqualifying
purpose or effect".
<(10)> Rule 13d-1(c).
<(11)> The Commission has revised, as proposed, the
certification on the Schedule 13G for Qualified
Institutional Investors to provide that such investors
certify that the securities were acquired and are held
in the ordinary course of business and were not
acquired and are not held for the purpose of and do not
have the effect of changing or influencing the control
of the issuer of such securities and were not acquired
and are not held in connection with or as a participant
(continued...)
======END OF PAGE 5======
the short-form report on Schedule 13G within 45 calendar days after the
calendar year end. Exempt Investors also will continue to file their
initial Schedule 13G within 45 calendar days after the calendar year in
which they became subject to Section 13(g) and new Rule 13d-1(d).
Even though a Passive Investor may report on Schedule 13G, it will be
permitted to file a Schedule 13D instead. The fact that an investor can
represent that it does not have a disqualifying purpose or effect but
nevertheless chooses to file on a Schedule 13D may provide important
information concerning the filing person's investment purpose.
B. Filing Periods for Passive Investors Filing on Schedule 13G
As adopted, Passive Investors choosing to file a Schedule 13G will
file the initial schedule within 10 calendar days of crossing the five
percent threshold. Requiring the filing within 10 days, rather than the 45
days following year end as is currently applicable to Qualified
Institutional Investors and Exempt Investors, will provide more timely
notice to the market and to investors of the existence of voting blocks
that have the potential of affecting or influencing control of the issuer.
Although the Commission is adopting the initial reporting obligations
for Passive Investors as proposed that are more stringent than those for
Qualified Institutional Investors, the Commission is adopting a more
liberal approach for amending Schedule 13G. The rule permits Passive
<(11)>(...continued)
in any transaction having such purpose or effect
(emphasis added). This amendment to the certification
is to conform the language of the certification to
amended Rule 13d-1(e).
======END OF PAGE 6======
Investors to amend in a manner similar, but more promptly than, Qualified
Institutional Investors reporting on Schedule 13G.<(12)>
As proposed, Passive Investors would have been subject to the more
stringent amendment requirements that currently apply to Schedule 13D
filers. Seven commenters specifically addressed the proposed amendment
requirements and five commenters believed that the proposals were too
complex and overly cautious. Those commenters believed that the
application of the more stringent amendment requirements to Passive
Investors would significantly diminish the benefits of the proposals
overall to Passive Investors and would be inconsistent with the
Commission's intent to reduce the reporting obligations of Passive
Investors. One commenter noted that if the Passive Investors have no
intent to influence or change control of the issuer, then there is no
substantially greater need to track the percentage changes in holdings of
Passive Investors, and therefore they should be treated no differently than
Qualified Institutional Investors. In contrast, other commenters argued
that the proposed accelerated filing of these Schedule 13G amendments for
Passive Investors is necessary to provide notice to investors, issuers, and
<(12)> Amended Rule 13d-2(b) requires Qualified Institutional
Investors to amend Schedule 13G 45 days after the end
of each calendar year if, as of the end of such
calendar year, if there are any changes in the
information reported in the previous filing on that
Schedule. Further, under amended Rule 13d-2(c) if
their beneficial ownership exceeds 10 percent of the
class at the end of any month, an amendment would be
required to be filed within 10 days after the end of
that month, as well as within 10 days after the end of
any month in which their ownership increases or
decreases by more than five percent of such class.
======END OF PAGE 7======
to the market of voting blocks of securities that have the potential of
affecting or influencing control of the issuer.
While the Commission appreciates that the beneficial ownership rules
are already complex, separate amendment requirements for Passive Investors
appear to be necessary to address these competing concerns raised by the
commenters. The views of the commenters on the amendment issue suggest
that neither the current 13D nor 13G approach would be appropriate. By
requiring prompt reporting of more than five percent changes in position,
the Commission believes that sufficient information will be provided to
investors, issuers, and to the market regarding the changes in percentage
ownership of Passive Investors. To further prevent any possible abuse in
the use of Schedule 13G by investors that have a disqualifying purpose or
effect, the Commission is adopting, as proposed, the "cooling-off" period
upon a change in investment purpose and the same "cooling-off" period will
apply upon acquiring 20 percent or more of the class.<(13)>
Accordingly, as adopted, Passive Investors must amend the Schedule 13G
within 45 calendar days after the end of the calendar year to report any
change in the information previously reported. Passive Investors also will
amend the Schedule 13G during the year if they acquire greater than 10
percent of the subject securities. This amendment will be required to be
filed "promptly" <(14)> upon acquiring greater than 10 percent.
<(13)> See Sections II.C. and II.D. infra.
<(14)> The determination of what constitutes "promptly" under
Regulation 13D-G is based upon the facts and
circumstances surrounding the materiality of the change
in information triggering the filing obligation and the
filing person's previous disclosures. Any delay beyond
the date the filing reasonably can be filed may not be
(continued...)
======END OF PAGE 8======
Between 10 percent and less than 20 percent, Passive Investors will be
required to file additional amendments "promptly" during the year if they
increase or decrease their beneficial ownership by more than five percent
of the class.
These new amendment requirements for Passive Investors that acquire
greater than 10 percent of the class are different than the amendment
requirements for Qualified Institutional Investors that acquire greater
than 10 percent. Qualified Institutional Investors have until 10 days
after the month in which they acquired greater than ten percent to amend
their Schedule 13G. Qualified Institutional Investors holding more than 10
percent have until 10 days after the month in which they increased or
decreased their beneficial ownership by more than five percent. In each
case, the Qualified Institutional Investor's beneficial ownership is
computed as of the last day of the month. The Qualified Institutional
Investors are permitted greater flexibility in filing amendments in
recognition of the fact that Qualified Institutional Investors routinely
buy and sell securities in the ordinary course of business and are less
likely to abuse the process.
C. 13D Filing Requirement and Cooling-Off Period for Changes in
Investment Purpose or Effect
When Qualified Institutional Investors and Passive Investors determine
they hold the subject securities with a disqualifying purpose or effect,
they must file a Schedule 13D no later than 10 calendar days after the
<(14)>(...continued)
prompt. See In the Matter of Cooper Laboratories,
Inc., Release No. 34-22171 (June 26, 1985).
======END OF PAGE 9======
change in investment purpose.<(15)> The Commission is adopting, as
proposed, a "cooling-off" period that will begin with the change in
investment purpose and last until the expiration of the tenth calendar day
from the date of the filing of a Schedule 13D. During the cooling-off
period, the reporting person is prohibited from voting or directing the
voting of the subject securities or acquiring additional beneficial
ownership of any equity securities of the issuer or any person controlling
the issuer.
Seven commenters specifically addressed the proposals regarding the
Schedule 13D filing requirement upon a change in investment purpose or
effect and the related cooling-off period. Three of those commenters
supported the Schedule 13D filing requirement and cooling-off period as
proposed. The other four commenters supported the concept of a cooling-off
period but thought the period should be shortened. However, in light of
the changes being adopted today to liberalize the amendment requirements
for Passive Investors reporting on Schedule 13G, the Commission believes
the 10 day cooling-off period, as adopted, is necessary and appropriate.
The earlier commencement of the cooling-off period will encourage the
prompt filing of a Schedule 13D.<(16)> The cooling-off period will
prevent further acquisitions or the voting of the subject securities until
the market and investors have been given time to react to the information
in the Schedule 13D filing.
<(15)> Rule 13d-1(e).
<(16)> The sooner the Schedule 13D filing is made, the sooner
the cooling-off period will end, since the cooling-off
period ends 10 calendar days from the date the Schedule
13D is filed.
======END OF PAGE 10======
D. Twenty-Percent Limit on Ownership Interest Reportable on
Schedule 13G and Related Cooling-Off Period
Under today's amendments, Passive Investor status is limited to
holders of less than 20 percent of the class of subject securities. Upon
acquiring 20 percent or more, the investor must report the acquisition on
Schedule 13D within 10 calendar days.<(17)> Additionally, the
investor will be subject to a "cooling-off" period commencing from the time
the investor reaches the 20 percent threshold until ten calendar days after
the filing of the Schedule 13D.<(18)> During this period, the
investor will be prohibited from voting or directing the voting of the
subject securities and from acquiring additional beneficial ownership in
any equity securities of the issuer. This cooling-off period is the same
period that applies to Passive Investors and Qualified Institutional
Investors when they change their investment purpose. The Commission
proposed a standstill<(19)> period upon the acquisition of 20 percent
or more of the class. The Commission is adopting the cooling-off period in
lieu of the standstill period at the 20 percent threshold in order to
further prevent abuse of the liberal amendment requirements adopted today
for Passive Investors and to simplify Regulation 13D-G.
<(17)> Upon reaching the 20 percent limit, the investor is not
required to amend its Schedule 13G in addition to
filing the Schedule 13D.
<(18)> Rule 13d-1(f).
<(19)> The "standstill" period would have commenced upon
acquiring 20 percent or more of the class and
terminated upon the filing of the Schedule 13D. During
the standstill period, the investor would have been
prohibited from voting its securities or acquiring
additional equity securities in the issuer.
======END OF PAGE 11======
Six commenters specifically addressed the proposal regarding the 20
percent limitation and related standstill period. A majority of those
commenters supported the 20 percent limitation. One commenter believed the
ownership limit should be lowered to 10%. Three commenters supported the
standstill period as proposed. Two commenters believed that it would be
unfair to Passive Investors to impose a limit on beneficial ownership
reportable on Schedule 13G and to apply any standstill period. Those
commenters believed that if an investor can make the passive certification,
then it should be treated the same as Qualified Institutional Investors.
The Commission believes that the 20 percent limitation and the cooling-off
period adopted today are necessary and appropriate for prompt disclosure of
sizeable blocks of securities because of the inherent control implications
corresponding to such ownership positions held by persons that do not
purchase securities in the ordinary course of business.<(20)>
The 20 percent limit applies only with respect to Passive Investors
reporting on Schedule 13G pursuant to new Rule 13d-1(c). Qualified
Institutional Investors and Exempt Investors are not subject to the 20
percent limitation because the Commission recognizes that institutions that
purchase securities in the ordinary course of business may be burdened by a
limitation on the amount of securities that can be reported on the short-
<(20)> As stated in the Reproposing Release, the Commission
does not intend these new rules to create a presumption
that beneficial ownership of 20 percent or more
indicates control or a control purpose. Further, no
presumption is intended that beneficial ownership below
20 percent cannot indicate control or a control
purpose. Indeed, the Commission believes that it would
be unusual for an investor to be able to make the
necessary certification of a passive investment purpose
when beneficial ownership approaches 20 percent.
======END OF PAGE 12======
form Schedule 13G. Further, the Commission believes that Schedule 13G
strikes an appropriate balance between furnishing disclosure to the market
and the burdens placed on such institutions.
E. Re-establishing Schedule 13G Eligibility
The amended rules allow persons who have lost their eligibility to
file on Schedule 13G to re-establish their Schedule 13G-eligibility and
again report on Schedule 13G.<(21)> Specifically, a Qualified
Institutional Investor that has lost its Schedule 13G eligibility, because
it is no longer a qualified entity under Rule 13d-1(b)(1)(ii) or cannot
make the required certification, is allowed to switch back to Schedule 13G
pursuant to the Qualified Institutional Investor provision<(22)> once
it re-establishes its status under Rule 13d-1(b)(1)(ii) or can again make
the necessary certification. Similarly, a Passive Investor that has lost
its Schedule 13G-eligibility under Rule 13d-1(c), because it can no longer
certify that it does not have a disqualifying purpose or effect or because
it reached the 20 percent threshold, is able to switch back to Schedule 13G
when it can once again make the certification or when its beneficial
ownership falls below 20 percent. The Commission believes that investors
and the market will be better informed if reporting persons are able to
switch back to Schedule 13G after re-establishing their eligibility, since
the filing of a Schedule 13D will be a clearer indicator of investors that
currently have a disqualifying purpose or effect or investors that hold 20
percent or more of the class.
<(21)> Rule 13d-1(h).
<(22)> Rule 13d-1(b).
======END OF PAGE 13======
Once a Schedule 13D reporting person decides to switch to a Schedule
13G, the Schedule 13G would be filed to reflect that decision.<(23)>
The filing of the Schedule 13G will be deemed to amend the Schedule 13D.
Therefore, no formal amendment to the Schedule 13D will be required.
F. Expansion of the Class of Qualified Institutional Investors
1. Foreign Institutional Investors
Under the amended rules, the use of the short-form Schedule 13G
pursuant to the Qualified Institutional Investor provisions of Rule 13d-
1(b) will continue to be limited essentially to institutions such as
brokers, dealers, investment companies, and investment advisers registered
with the Commission, or regulated banks or insurance companies. The use of
Schedule 13G by similar non-domestic institutions has been limited in the
past to those institutions that have obtained an exemptive order from the
Commission<(24)> or, under the current practice, a no-action position
from the Division of Corporation Finance. The no-action relief was based
on the requester's undertaking to grant the Commission access to
information that would otherwise be disclosed in a Schedule 13D and the
comparability of the foreign regulatory scheme applicable to the particular
category of institutional investor.
The Commission is not expanding the list of qualified institutional
investors to include foreign institutions. The Passive Investor provisions
<(23)> The Schedule 13G would be filed as an initial Schedule
13G as opposed to an amendment even if the reporting
person had reported on Schedule 13G before losing its
Schedule 13G-eligibility.
<(24)> See Exchange Act Release No. 14692 (April 21, 1978) [43
FR 18484].
======END OF PAGE 14======
adopted today make Schedule 13G available to all investors that do not have
a disqualifying purpose or effect, including foreign investors. These new
provisions have more lenient filing requirements for amendments to Schedule
13G than as originally proposed.<(25)> Therefore, foreign
institutional investors wanting to report on Schedule 13G should be able to
rely on the passive investor provisions without significant difficulty.
Any foreign institutional investor that would rather report on Schedule 13G
as a Qualified Institutional Investor and does not want to rely on the
Passive Investor provisions may continue to seek no-action relief from the
staff under current practices.
2. State and Local Governmental Employee Benefit Plans
The Commission is expanding the list of Qualified Institutional
Investors under Rule 13d-1(b)(1)(ii) to allow employee benefit plans
maintained primarily for the benefit of state or local government employees
to report on Schedule 13G. The Commission believes that these plans are
now generally subject to fiduciary obligations and standards for investment
that are substantially similar to those imposed by Employee Retirement
Income Security Act of 1974 ("ERISA"). The Commission has revised the
language in Rule 13d-1(b)(1)(ii)(F) to eliminate the phrase "pension fund"
because such entities are included in the definition of employee benefit
plan in Section 3(3) of ERISA.
The Commission is making a conforming change to the beneficial owner
definition under Section 16 by amending Rule 16a-1(a)(1)(vi) to include
state and local government employee benefit plans in the list of persons
<(25)> See Section II.B. above.
======END OF PAGE 15======
that are not deemed to be the beneficial owners of securities held for the
benefit of third parties.
3. Savings Associations
Based upon the suggestions of commenters, the Commission is expanding
the list of Qualified Institutional Investors under Rule 13d-1(b)(1)(ii) by
adding new paragraph (H) to allow savings associations to report on
Schedule 13G. Adding savings associations to the list of Qualified
Institutional Investors codifies the staff no-action relief granted to
Columbia Savings and Loan (June 15, 1987).
The Commission is making a conforming change to the Section 16 rules
by adding new Rule 16a-1(a)(1)(viii) to include savings associations in the
list of persons that are not deemed to be the beneficial owners of
securities held for the benefit of third parties.
4. Church Plans
Also upon the suggestion of commenters, the Commission is expanding
the list of Qualified Institutional Investors under Rule 13d-1(b)(1)(ii) by
adding new paragraph (I) to allow church employee benefit plans to report
on Schedule 13G. Adding church plans to the list of Qualified
Institutional Investors is consistent with the treatment of church plans
under the National Securities Markets Improvement Act of 1996<(26)>
which exempts such plans from most federal securities regulation.
The Commission is making a conforming change to the Section 16 rules
by adding new Rule 16a-1(a)(1)(ix) to include church plans in the list of
<(26)> Title V, Section 508.
======END OF PAGE 16======
persons that are not deemed to be the beneficial owners of securities held
for the benefit of third parties.
5. Control Persons of Qualified Institutional Investors
The Commission is expanding the list of Qualified Institutional
Investors under Rule 13d-1(b)(1)(ii) to allow control persons of Qualified
Institutional Investors to report indirect beneficial ownership through the
controlled entity on Schedule 13G. In order to use Schedule 13G, the
control person must not own directly, or indirectly through an ineligible
entity or affiliate, more than one percent of the subject company's stock
and is not seeking to change or influence control of the subject
company.<(27)>
The Commission is making a conforming change to the Section 16 rules
by amending Rule 16a-1(a)(1)(vii) to include control persons of qualified
institutions in the list of persons that are not deemed to be beneficial
owners of securities held for the benefit of third parties.<(28)>
Four commenters have requested some form of relief or guidance on when
beneficial ownership under Rule 13d-3 should be attributed among entities
under common control. This issue arises in the case of a consolidated
group of corporations under common control or in the case of a single
entity that has separately managed businesses within the same legal entity.
<(27)> Rule 13d-1(b)(1)(ii)(G). This amendment codifies the
no-action position set forth in Warren E. Buffet &
Berkshire Hathaway, Inc., (available December 5, 1986).
Two commenters addressed this proposal and both
commenters supported the proposal.
<(28)> This amendment under Section 16 codifies the
interpretive position set forth in Edward C. Johnson
3d., (available August 20, 1991).
======END OF PAGE 17======
The Commission recognizes that certain organizational groups are comprised
of many different business units that operate independently of each other.
They may nevertheless have to aggregate beneficial ownership for Regulation
13D-G reporting purposes.<(29)> The need to aggregate may have the
effect of requiring diverse business units to share sensitive information,
when it is otherwise not necessary for business purposes.
Because the Rule 13d-3(a) definition of beneficial ownership includes
persons who have both direct and indirect, as well as shared, voting and
investment power, beneficial ownership by the business units, divisions or
subsidiaries that hold the securities normally should be attributed to the
parent entities that are in a control relationship to the shareholder
entity. In those instances where the organizational structure of the
parent and related entities are such that the voting and investment powers
over the subject securities are exercised independently, attribution may
not be required for the purposes of determining whether a filing threshold
has been exceeded and the aggregate amount owned by the controlling
persons.<(30)>
The determination as to whether the voting and investment powers are
exercised independently from the parent and other related entities is based
on the facts and circumstances. One circumstance in which beneficial
<(29)> Since state takeover statutes and shareholder rights
provisions are triggered by certain "beneficial
ownership" or "voting power" thresholds -- and may even
use the beneficial ownership definition under Rule 13d-
3 -- there is a concern that reporting ownership on an
aggregate basis may trigger some of those provisions.
<(30)> Likewise, under these circumstances, attribution may
not be required under Rule 16a-1(a)(1).
======END OF PAGE 18======
ownership may not be required to be attributed to the parent entities is
when these entities have in place certain informational barriers that
ensure that the voting and investment powers are exercised independently
from parent and affiliated entities.<(31)> This approach
assumes that there will not be arbitrary or artificial separation of
business units. One factor militating against separation would be
participation in a common compensation pool that may align voting and
investment decisions.
When informational barriers are relied upon to avoid attributing
beneficial ownership to the parent entities, the various companies or
groups should maintain and enforce written policies and procedures
reasonably designed to prevent the flow of information to and from the
other business units, divisions and entities that relate to the voting and
investment powers over the securities. Those companies or groups also
should obtain an annual, independent assessment of the operation of the
policies and procedures established to prevent the flow of information
among the related entities. The frequency in which an informational
barrier is crossed with respect to a particular security (and therefore
<(31)> The Commission adopted a similar approach in modifying
the definition of "affiliated purchaser" under
Regulation M. See Exchange Act Release No. 38067
(December 20, 1996) [62 FR 520]. Although
informational barriers may serve to prevent the
attribution of beneficial ownership to the parent
entities, a group under Rule 13d-5(b) can still be
formed among commonly controlled entities or with the
parent entity that otherwise own securities in the
issuer if these persons agree to act together for the
purpose of acquiring, holding, voting or disposing of
the subject securities. See e.g., In the Matter of the
Gabelli Group, Inc., et al, Exchange Act Rel. No. 26005
(August 17, 1988).
======END OF PAGE 19======
beneficial ownership would be attributed for that security) would raise
questions regarding the efficacy of the informational barrier overall.
However, an isolated instance in which this occurs would not necessarily
impact the ownership treatment of securities of other issuers held by the
reporting person.<(32)>
Finally, the parent entities should have no officers or directors (or
persons performing similar functions) or employees (other than clerical,
ministerial, or support personnel) who are involved in the exercise of the
voting and investment powers in common with the shareholder.<(33)>
For example, the existence of an independent investment committee would be
evidence of an effective separation between the parent and the affiliated
entities.
6. Investment Advisers Prohibited from Registering under the
Investment Advisers Act of 1940 Pursuant to Section 203A of that
Act
<(32)> To the extent the informational barrier is crossed,
beneficial ownership of that class of security should
be reported on an aggregate basis by the entities
sharing the information.
<(33)> The entities may have common officers, directors, and
employees but those persons must not be involved in the
exercise of the voting and investment powers or
otherwise made aware of specific securities positions
which are not publicly available. This factor would
ensure that persons involved in the exercise of the
voting and investment powers are not the same persons
that would exercise such powers for the parent entity
and therefore no information concerning the exercise of
such powers would pass through the informational
barrier.
======END OF PAGE 20======
Since the issuance of the Reproposing Release, Congress passed the
National Securities Markets Improvement Act of 1996<(34)>. Among
other things, the Act amended the Investment Advisers Act of 1940 (the
"Advisers Act") by adding Section 203A, which prohibits certain investment
advisers from registering with the Commission. For the most part, only
advisers that have "assets under management" of $25 million or more, that
advise registered investment companies, or that meet one of several
exemptions from the prohibition on registration will be registered with the
Commission. Other advisers will be regulated by state securities
authorities. Currently, Rule 13d-1(b)(1)(ii)(E) restricts the use of
Schedule 13G to investment advisers registered under Section 203 of the
Advisers Act. Today the Commission is amending this rule to allow those
investment advisers that are prohibited from registering under the Advisers
Act pursuant to Section 203A of that Act to report on Schedule 13G as a
Qualified Institutional Investor. Although these persons will not be
subject to the federal regulatory regime for investment advisers, they will
continue to buy and sell securities in the ordinary course of business and
their businesses will be regulated by state law.
The Commission is making a conforming change to the Section 16 rules
by amending Rule 16a-1(a)(1)(v) to include these investment advisers in the
list of persons that are not deemed to be the beneficial owners of
securities held for the benefit of third parties.
G. Shareholder Communications and Beneficial Ownership Reporting
<(34)> Pub. L. No. 104-290, 110 Stat. 3416 (1996) (codified in
scattered sections of the United States Code).
======END OF PAGE 21======
The Commission requested comment as to whether the Section 13(d)
reporting obligations restrict a shareholder's ability to engage in proxy
related activities including the ability to use the proxy rule exemptions
that were adopted in 1992 to facilitate communications among shareholders.
The Commission asked whether relief, in addition to that adopted today,
from Schedule 13D filing obligations with respect to soliciting activities
is necessary and appropriate.
Only seven commenters responded to this request for comment. Two
commenters believed that the Section 13(d) reporting obligations do not
restrict the use of the proxy rule exemptions. The other five commenters
believed that the reporting obligations do restrict the use of the proxy
rule exemptions and all those commenters requested the Commission to
provide various forms of relief or guidance on the matter. The two primary
concerns raised by the five commenters are that activities exempt from the
rules:
(i) may constitute the formation of a "group" under Rule 13d-5(b); or
(ii) may be construed as having the purpose or effect of changing or
influencing the control of the issuer, and therefore would
disqualify a person from eligibility to use Schedule 13G.
Although the Commission agrees that it can provide some further
guidance in this area as discussed below, the Commission does not believe
that the current beneficial ownership and group concepts unduly interfere
with the type of shareholder communications contemplated by the proxy rule
exemptions. The Commission believes that no further relief from the
Section 13(d) filing obligations is required.
Specifically, the Commission believes that a shareholder who is a
passive recipient of soliciting activities, without more, would not be
======END OF PAGE 22======
deemed a member of a group under Rule 13d-5(b)(1) with persons conducting
the solicitation. This would be true even where the soliciting activities
result in the shareholder granting a revocable proxy. Similarly, when a
shareholder solicits and receives revocable proxy authority (subject to the
discretionary limits of Rule 14a-4), without more, that shareholder does
not obtain beneficial ownership under Section 13(d) in the shares
underlying the proxy.
The eligibility to use Schedule 13G by a shareholder who submits,
supports, or engages in exempt soliciting activity in favor of a
shareholder proposal submitted pursuant to Rule 14a-8, will depend on
whether that activity was engaged in with the purpose or effect of changing
or influencing control of the company. That determination normally would
be based upon the specific facts and circumstances accompanying the
solicitation and the vote. For that reason, the Commission is not able to
provide extensive guidance on this issue.
In some cases the subject matter of the proposal or solicitation may
be dispositive. For example, most solicitations regarding social or public
interest issues (e.g., environmental policies, apartheid, etc.) would not
have the purpose or effect of changing or influencing control of the
company. Corporate governance proposals, however, may or may not be
control related. Proposals and soliciting activity relating to matters
such as executive compensation, director pensions, and confidential voting
normally would not prevent the use of a Schedule 13G. Even corporate
governance issues that are presumably control related (e.g., removal of a
poison pill, opting out of state takeover statutes, or removal of staggered
boards) might not have a disqualifying purpose or effect, depending on the
======END OF PAGE 23======
circumstances. In contrast, most solicitations in support of a proposal
specifically calling for a change of control of the company (e.g., a
proposal to seek a buyer for the company or a contested election of
directors or a sale of a significant amount of assets or a restructuring of
a corporation) would clearly have that purpose and effect. Some relevant
factors to consider in assessing the purpose and effect of the type of
proposal and related soliciting activity include:
(1) Does the filing person purchase securities in the ordinary course
of business and by its nature does not seek to acquire control of
companies?
(2) Was the proposal submitted or solicitation undertaken based upon
the filing person's investment policies regarding good corporate
governance for all the filer's portfolio companies, rather than
to foster a control transaction for the particular company?
(3) Was the proposal submitted, or solicitation commenced, under
circumstances where, given the subject matter of the particular
proposal, it is likely to have the effect of facilitating a
change of control of that particular company by another person or
group (for example, the submission of a proposal to eliminate a
staggered board that may facilitate a non-management
solicitation, even by an unrelated third party)?
(4) Did the filing person commence an independent solicitation,
exempt or otherwise, in favor of a proposal (the mere submission
of a proposal under Rue 14a-8, without any independent soliciting
activity, would be less likely to have a disqualifying purpose or
effect)?
(5) Was the activity undertaken in opposition to a proposal put forth
by management for shareholder approval, rather than in support of
a proposal submitted by the filing person or some other
shareholder?
Some proxy-related activities, by their nature, will have only limited
effect on control of the company, and therefore should normally not cause a
shareholder to lose its 13G eligibility. For example, voting in favor of
an insurgent or making a voting announcement under Rule 14a-1(l)(2)(iv) in
favor of a corporate governance proposal, without more, would not cause the
======END OF PAGE 24======
loss of Schedule 13G eligibility, regardless of the subject matter. This
is true even if the voting announcement supports a non-management
shareholder proposal.
Although in many instances these determinations will be difficult and
fact intensive, the Commission believes that the amendment adopted today
that allows a person to re-establish its Schedule 13G eligibility
<(35)> should serve to lessen the concern that a Schedule 13G filing
person may lose its eligibility to report on Schedule 13G by engaging in or
being a part of soliciting activities. Under new Rule 13d-1(h), if a
reporting person loses its Schedule 13G eligibility due to its soliciting
activities and is required to then report on Schedule 13D, the reporting
person can switch back to Schedule 13G when the reporting person is no
longer involved in the soliciting activities and can make the necessary
certifications.<(36)>
H. Related and Clarifying Amendments
The Commission also has eliminated the redundancies that existed in
Regulation 13D-G regarding the filing and dissemination requirements by
setting forth such requirements in one rule, Rule 13d-7(b). The Commission
believes that Schedule 13G will become the primary reporting document for
beneficial ownership, since a majority of investors will now file Schedule
<(35)> Rule 13d-1(h).
<(36)> On September 18, 1997, the Commission proposed amending
Rule 14a-8 to provide an override mechanism from the
exclusion of the shareholder proposal under Rule 14a-
8(c)(5) and (c)(7). See Release No. 34-39093. The
13G-eligibility of a shareholder who would use the
proposed override mechanism to submit a shareholder
proposal would be determined in the same manner as
discussed in this section.
======END OF PAGE 25======
13G in lieu of Schedule 13D. For this reason, the Commission proposed that
the original and amendments to Schedules 13G be provided to each exchange
where the security is traded as is currently required for Schedules 13D.
However, since these filings will be made by persons without a
disqualifying purpose or effect and are now required to be filed
electronically on the Commission's Electronic Data Gathering and Retrieval
System and therefore available in the electronic media, including on the
Commission's World Wide Web site (http://www.sec.gov), the Commission is
not adopting this proposal. Likewise, due to the electronic availability
of Schedules 13D, the Commission is not adopting the proposal that a copy
of the Schedule 13D and amendments thereto be provided to the National
Association of Securities Dealers for securities quoted on the National
Association of Securities Dealers Automated Quotation System
("NASDAQ").<(37)>
Additionally, because of the electronic availability of filings and
the fact that Schedules 13G do not represent control transactions, the
Commission is further simplifying the dissemination requirements for all
Schedule 13G filers by eliminating the requirement that Schedules 13G be
sent to the exchanges. Accordingly, copies of all initial Schedules 13G
and amendments filed with the Commission by Passive Investors, Qualified
Institutional Investors, and Exempt Investors will only be required to be
sent to the issuer and will not be required to be sent to any exchange or
automated quotation system on which the securities are traded.
<(37)> Schedules 13D will, however, continue to be sent to
each exchange on which the security is traded, which is
a statutory requirement.
======END OF PAGE 26======
The amendments clarify the number of copies required to be filed to
the extent paper filings may be made. The Commission notes that paper
filings would be relatively rare, since all Schedules 13D and 13G must be
filed in electronic format, unless they relate to the securities of a
foreign private issuer or the filer has received a hardship exemption.
Additionally, the rules have been revised to eliminate language regarding
filing fees for Schedules 13D and 13G since such fees have been previously
eliminated.<(38)> Finally, technical amendments to Schedules 13D and
13G have been made to conform the schedules to the proposed rules and to
amend the filing deadlines and the number of copies in the instruction.
<(38)> See Exchange Act Release No. 7331 (September 24, 1996).
======END OF PAGE 27======
[Insert Chart, III. Effects of Amendments to Regulation 13D-G]
======END OF PAGE 28======
[Insert Chart]
======END OF PAGE 29======
[Insert Chart]
======END OF PAGE 30======
[Insert Chart]
======END OF PAGE 31======
IV. FINAL REGULATORY FLEXIBILITY ANALYSIS
A Final Regulatory Flexibility Analysis ("FRFA") has been prepared in
accordance with 5 U.S.C. 604 concerning the amendments to the beneficial
ownership rules of Regulation 13D-G and related Schedules 13D and 13G and
the amendments to Rule 16a-1(a)(1). The analysis notes that the principal
effect of the revisions to Regulation 13D-G will be to reduce the
disclosure obligations and associated costs to a majority of persons,
including small entities, required to report beneficial ownership under
Sections 13(d) and 13(g) of the Exchange Act and would eliminate the
reporting obligations under Section 16 of the Exchange Act of certain
governmental employee benefit plans, church plans, savings associations,
investment advisers registered with the state and certain control persons
of Qualified Institutional Investors. The analysis also indicates that
there are no current federal rules that duplicate, overlap or conflict with
the rules and forms to be amended.
As stated in the analysis, alternatives to the proposed amendments
were considered, including, among other things, changing or simplifying the
compliance or reporting requirements for small entities or exempting small
entities from all requirements to file the schedules under Regulation 13D-
G. As discussed in the analysis, there is no less restrictive alternative
to the amendments that would serve the purposes of the beneficial ownership
provisions of the Exchange Act. As originally proposed, Passive Investors
would have been subject to more stringent amendment requirements that would
have required amendments to be filed upon every one percent change in their
beneficial ownership. However, in order to further reduce the reporting
burdens of Passive Investors, the Commission is not adopting the proposed
======END OF PAGE 32======
amendment requirements. Under the adopted rules, Passive Investors will
only file amendments to their Schedules 13G upon greater than five percent
changes in their beneficial ownership, as well as the annual amendment.
Further, the Commission originally proposed that a copy of the Schedule 13G
be sent to each exchange on which the security is traded and to NASDAQ if
the security trades there. However, in order to simplify the dissemination
requirements, copies of the Schedule 13G will not be required to be sent to
any exchange or NASDAQ and will only continue to be sent to the issuer, as
well as being filed with the Commission.
The Commission received no comments on the Initial Regulatory
Flexibility Analysis ("IRFA") prepared in connection with the proposing
release. Five commenters indicated that the amendments would improve the
effectiveness of the beneficial ownership reporting system and would reduce
the reporting burdens of Passive Investors.
A copy of the FRFA may be obtained by contacting Dennis O. Garris in
the Office of Mergers and Acquisitions, Division of Corporation Finance,
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549.
V. PAPERWORK REDUCTION ACT
The beneficial ownership reporting requirements are intended to
provide investors and the subject issuer with information about
accumulations of securities that may have the ability to change or
influence control of the issuer. Before the amendments adopted today,
Regulation 13D-G required that most persons file a detailed disclosure
statement on the long-form Schedule 13D upon acquiring more than five
percent of the subject securities. Certain qualified institutions
======END OF PAGE 33======
(Qualified Institutional Investors) and persons who have not made an
acquisition subject to Section 13(d) (Exempt Investors) may file the short-
form disclosure statement Schedule 13G which requires less detailed
disclosure than Schedule 13D.
The amendments make Schedule 13G available, in lieu of Schedule 13D,
to all Passive Investors beneficially owning less than 20 percent. The
Commission anticipates that the amendments will reduce the existing
information collection requirements associated with Regulation 13D-G and
Schedules 13D and 13G. The amendments will allow more individuals and non-
institutional investors to file the short-form Schedule 13G. An important
change from the proposed rules is that Passive Investors filing on Schedule
13G will be subject to the more liberal filing requirements with respect to
amending the Schedule 13G. This change further reduces the reporting
obligations of Passive Investors. Under the amended rules, Passive
Investors must amend the Schedule 13G within 45 calendar days after the end
of the calendar year to report any change in the information previously
reported. Passive Investors also will promptly amend the Schedule 13G
during the year if they acquire greater than 10 percent of the subject
securities and thereafter upon an increase or decrease of greater than five
percent. Further, in order to reduce the dissemination requirements for
all persons filing Schedules 13G, the Commission is not adopting the
proposed requirement that Schedules 13G be sent to each exchange on which
the security is traded and to NASDAQ if the security trades on its system.
As adopted, Schedules 13G will only be required to be sent to the issuer as
well as being filed with the Commission.
======END OF PAGE 34======
In a recent study performed by the Office of Economic
Analysis,<(39)> 63 percent of the Schedules 13D surveyed disclosed a
passive investment purpose. Of the total surveyed, 53 percent disclosed a
passive investment purpose and held less than 20 percent of the class of
equity securities and therefore would be eligible to file on Schedule 13G
under the new rules as Passive Investors.<(40)> It is estimated that
1646 Schedules 13D will be filed each year under the new rules.<(41)>
Each Schedule 13D would impose an estimated burden of 14.75 hours for a
total annual burden of 24,278.50 hours.<(42)> It is estimated that
9,044 Schedules 13G will be filed each year under the new
<(39)> The sample included 100 Schedules 13D filed from May
21, 1997 to June 2, 1997.
<(40)> In an earlier survey discussed in the Reproposing
Release, 110 Schedules 13D filed in November and
December 1994 were surveyed and 76 percent disclosed a
passive investment purpose. Of the total surveyed, 63
percent disclosed a passive investment purpose and held
less than 20 percent of the class of securities and
would therefore be eligible to use Schedule 13G as
Passive Investors.
<(41)> This estimated number of respondents is based upon the
number of Schedules 13D filed in fiscal year 1996 and
assumes no increase each year. This represents an
estimated 53 percent reduction from the 3,503 Schedules
13D filed in fiscal year 1996. The estimated 53
percent reduction in Schedule 13D filings is based upon
the sample data provided by the Office of Economic
Analysis.
<(42)> Total annual burden hours are determined by multiplying
the estimated average burden hours for completing the
particular schedule by the estimated number of
respondents that file that schedule.
======END OF PAGE 35======
rules.<(43)> Each Schedule 13G would impose an estimated burden of
10 hours for a total annual burden of 90,440 hours.
The Commission did not receive any Paper Work Reduction Act comments.
Providing the information required by Schedules 13D and 13G is mandatory
under Sections 13(d) and 13(g) and Regulation 13D-G of the Exchange Act.
The information will not be kept confidential. Unless a currently valid
OMB control number is displayed on the Schedules 13D and 13G, the
Commission may not sponsor or conduct or require response to an information
collection. The OMB control number is 3235-0145. The collection is in
accordance with the clearance requirements of 44 U.S.C. 3507.
VI. COST-BENEFIT ANALYSIS
No specific data was provided in response to the Commission's request
regarding the costs and benefits associated with amending the filing
requirements under Regulation 13D-G.<(44)> Making Schedule 13G
<(43)> This number of respondents is based upon the number of
Schedules 13G filed in fiscal year 1996 (7,187) plus
the additional 1,857 respondents that are expected to
file on Schedule 13G under the proposed rules and
assumes no increase each year.
<(44)> However, eight commenters expressed general views as to
the costs and benefits associated with the amendments,
without attempting to quantify either the costs or
benefits. Five commenters stated that the proposed
amendments would reduce passive filers' reporting
burdens and associated costs. Seven commenters
expressed concern that the proposed 20 percent
limitation upon the availability of Schedule 13G to
institutional investors that are passive would impose
increased compliance burdens and costs without
providing any useful information to the public.
Finally, three commenters believed that requiring
Schedule 13G filers to provide each exchange upon which
the security is traded a copy of the Schedule would be
overly burdensome because such information is not
readily available. The proposal to provide copies of
(continued...)
======END OF PAGE 36======
available to all Passive Investors holding less than 20 percent of subject
securities should significantly reduce the reporting costs incurred by
those investors. Regulation 13D-G applies to any person that acquires more
than five percent of a class of equity securities. The amendments will
decrease the disclosure obligations of a significant number of persons
currently required to file the long-form Schedule 13D. Based upon data
provided by the Commission's Office of Economic Analysis, 53 percent of
Schedules 13D studied by that office disclosed a passive investment purpose
and held less than 20 percent of the class of securities and, therefore,
would be eligible to file on Schedule 13G as Passive Investors under the
amendments adopted today.<(45)>
An important change from the proposed rules is that Passive Investors
filing on Schedule 13G will be subject to the more liberal filing
requirements with respect to amending the Schedule 13G. This change
further reduces the reporting obligations of Passive Investors. Commenters
believed that the amendment requirements, as proposed, were too burdensome
and that the potential benefit of the proposals to Passive Investors would
have been substantially outweighed by the costs of monitoring their
holdings and reporting the changes. Under the amended rules, Passive
Investors must amend the Schedule 13G within 45 calendar days after the end
of the calendar year to report any change in the information previously
reported. Passive Investors also will promptly amend the Schedule 13G
<(44)>(...continued)
Schedule 13G to each exchange is not being adopted.
<(45)> The sample included 100 Schedules 13D filed from May
21, 1997 to June 2, 1997.
======END OF PAGE 37======
during the year if they acquire greater than 10 percent of the subject
securities and thereafter upon an increase or decrease of greater than five
percent. Further, in order to reduce the dissemination requirements for
all persons filing Schedules 13G, the Commission is not adopting the
proposed requirement that Schedules 13G be sent to each exchange on which
the security is traded and to NASDAQ if the security trades on its system.
As adopted, Schedules 13G will only be required to be sent to the issuer as
well as being filed with the Commission.
The Commission does not believe that the amendments adopted today will
have any burden on competition or capital formation since the purpose of
the Regulation 13D-G filing requirements is only to report beneficial
ownership in public companies. The amendments adopted today will increase
market efficiency because with the reduced number of Schedule 13D filings
the market will be able to focus more quickly on acquisitions involving the
potential to change or influence control.
VII. STATUTORY BASIS AND TEXT OF AMENDMENTS
The amendments to Rules 13d-1, 13d-2, 13d-3 and 13d-7 and Schedules
13D and 13G and Rule 16a-1 are being adopted pursuant to the authority set
forth in Sections 3(b), 13, 16 and 23 of the Securities Exchange Act of
1934.
Lists of Subjects in 17 CFR Part 240
Reporting and recordkeeping requirements, Securities.
TEXT OF AMENDMENTS
In accordance with the foregoing, Title 17, Chapter II of the Code of
Federal Regulations is amended as follows:
PART 240 - GENERAL RULES AND REGULATIONS,
SECURITIES EXCHANGE ACT OF 1934
======END OF PAGE 38======
1. The authority citation for Part 240 continues to read, in part,
as follows:
Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77eee, 77ggg,
77nnn, 77sss, 77ttt, 78c, 78d, 78f, 78i, 78j, 78k, 78k-1, 78l, 78m, 78n,
78o, 78p, 78q, 78s, 78u-5, 78w, 78x, 78ll(d), 79q, 79t, 80a-20, 80a-23,
80a-29, 80a-37, 80b-3, 80b-4 and 80b-11, unless otherwise noted.
* * * * *
2. By amending 240.13d-1 to revise paragraph (a), the introductory
text of paragraph (b)(1), paragraphs (b)(1)(ii) and (b)(2), to remove
paragraphs (b)(3) and (b)(4) and to redesignate paragraphs (c), (d), (e)
and (f) as paragraphs (d), (i), (j) and (k), revise newly designated
paragraph (d) and to add paragraphs (c), (e), (f), (g) and (h) to read as
follows:
240.13d-1 Filing of Schedules 13D and 13G.
(a) Any person who, after acquiring directly or indirectly the
beneficial ownership of any equity security of a class which is specified
in paragraph (i) of this section, is directly or indirectly the beneficial
owner of more than five percent of the class shall, within 10 days after
the acquisition, file with the Commission, a statement containing the
information required by Schedule 13D (240.13d-101).
(b)(1) A person who would otherwise be obligated under paragraph (a)
of this section to file a statement on Schedule 13D (240.13d-101) may, in
lieu thereof, file with the Commission, a short-form statement on Schedule
13G (240.13d-102), Provided, That:
* * * * *
(ii) Such person is:
======END OF PAGE 39======
(A) A broker or dealer registered under section 15 of the Act (15
U.S.C. 78o);
(B) A bank as defined in section 3(a)(6) of the Act (15 U.S.C. 78c);
(C) An insurance company as defined in section 3(a)(19) of the Act (15
U.S.C. 78c);
(D) An investment company registered under section 8 of the Investment
Company Act of 1940 (15 U.S.C. 80a-8);
(E) Any person registered as an investment adviser under Section 203
of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3) or under the laws
of any state;
(F) An employee benefit plan as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. 1001
et seq. ("ERISA") that is subject to the provisions of ERISA, or any such
plan that is not subject to ERISA that is maintained primarily for the
benefit of the employees of a state or local government or instrumentality,
or an endowment fund;
(G) A parent holding company or control person, provided the aggregate
amount held directly by the parent or control person, and directly and
indirectly by their subsidiaries or affiliates that are not persons
specified in 240.13d-1(b)(1)(ii)(A) through (I), does not exceed one
percent of the securities of the subject class;
(H) A savings association as defined in Section 3(b) of the Federal
Deposit Insurance Act (12 U.S.C. 1813);
(I) A church plan that is excluded from the definition of an
investment company under section 3(c)(14) of the Investment Company Act of
1940 (15 U.S.C. 80a-3); and
======END OF PAGE 40======
(J) A group, provided that all the members are persons specified in
240.13d-1(b)(1)(ii)(A) through (I); and
* * * * *
(2) The Schedule 13G filed pursuant to paragraph (b)(1) of this
section shall be filed within 45 days after the end of the calendar year in
which the person became obligated under paragraph (b)(1) of this section to
report the person's beneficial ownership as of the last day of the calendar
year, Provided, That it shall not be necessary to file a Schedule 13G
unless the percentage of the class of equity security specified in
paragraph (i) of this section beneficially owned as of the end of the
calendar year is more than five percent; However, if the person's direct or
indirect beneficial ownership exceeds 10 percent of the class of equity
securities prior to the end of the calendar year, the initial Schedule 13G
shall be filed within 10 days after the end of the first month in which the
person's direct or indirect beneficial ownership exceeds 10 percent of the
class of equity securities, computed as of the last day of the month.
(c) A person who would otherwise be obligated under paragraph (a) of
this section to file a statement on Schedule 13D (240.13d-101) may, in
lieu thereof, file with the Commission, within 10 days after an acquisition
described in paragraph (a) of this section, a short-form statement on
Schedule 13G (240.13d-102). Provided, That the person:
(1) Has not acquired the securities with any purpose, or with the
effect of, changing or influencing the control of the issuer, or in
connection with or as a participant in any transaction having that purpose
or effect, including any transaction subject to 240.13d-3(b);
======END OF PAGE 41======
(2) Is not a person reporting pursuant to paragraph (b)(1) of this
section; and
(3) Is not directly or indirectly the beneficial owner of 20 percent
or more of the class.
(d) Any person who is or becomes directly or indirectly the
beneficial owner of more than five percent of any equity security of a
class specified in paragraph (i) of this section and who is not required to
file a statement under paragraph (a) of this section by virtue of the
exemption provided by Section 13(d)(6)(A) or (B) of the Act (15 U.S.C.
78m(d)(6)(A) or 78m(d)(6)(B)), or because the beneficial ownership was
acquired prior to December 22, 1970, or because the person otherwise
(except for the exemption provided by Section 13(d)(6)(C) of the Act (15
U.S.C. 78m(d)(6)(C))) is not required to file a statement, shall file with
the Commission, within 45 days after the end of the calendar year in which
the person became obligated to report under this paragraph (d), a statement
containing the information required by Schedule 13G (240.13d-102).
(e)(1) Notwithstanding paragraphs (b) and (c) of this section and
240.13d-2(b), a person that has reported that it is the beneficial owner
of more than five percent of a class of equity securities in a statement on
Schedule 13G (240.13d-102) pursuant to paragraph (b) or (c) of this
section, or is required to report the acquisition but has not yet filed the
schedule, shall immediately become subject to 240.13d-1(a) and 240.13d-
2(a) and shall file a statement on Schedule 13D (240.13d-101) within 10
days if, and shall remain subject to those requirements for so long as, the
person:
======END OF PAGE 42======
(i) Has acquired or holds the securities with a purpose or effect of
changing or influencing control of the issuer, or in connection with or as
a participant in any transaction having that purpose or effect, including
any transaction subject to 240.13d-3(b); and
(ii) Is at that time the beneficial owner of more than five percent of
a class of equity securities described in 240.13d-1(i).
(2) From the time the person has acquired or holds the securities with
a purpose or effect of changing or influencing control of the issuer, or in
connection with or as a participant in any transaction having that purpose
or effect until the expiration of the tenth day from the date of the filing
of the Schedule 13D (240.13d-101) pursuant to this section, that person
shall not:
(i) Vote or direct the voting of the securities described therein; or
(ii) Acquire an additional beneficial ownership interest in any equity
securities of the issuer of the securities, nor of any person controlling
the issuer.
(f)(1) Notwithstanding paragraph (c) of this section and 240.13d-
2(b), persons reporting on Schedule 13G (240.13d-102) pursuant to
paragraph (c) of this section shall immediately become subject to
240.13d-1(a) and 240.13d-2(a) and shall remain subject to those
requirements for so long as, and shall file a statement on Schedule 13D
(240.13d-101) within 10 days of the date on which, the person's beneficial
ownership equals or exceeds 20 percent of the class of equity securities.
(2) From the time of the acquisition of 20 percent or more of the
class of equity securities until the expiration of the tenth day from the
======END OF PAGE 43======
date of the filing of the Schedule 13D (240.13d-101) pursuant to this
section, the person shall not:
(i) Vote or direct the voting of the securities described therein, or
(ii) Acquire an additional beneficial ownership interest in any equity
securities of the issuer of the securities, nor of any person controlling
the issuer.
(g) Any person who has reported an acquisition of securities in a
statement on Schedule 13G (240.13d-102) pursuant to paragraph (b) of this
section, or has become obligated to report on the Schedule 13G (240.13d-
102) but has not yet filed the Schedule, and thereafter ceases to be a
person specified in paragraph (b)(1)(ii) of this section or determines that
it no longer has acquired or holds the securities in the ordinary course of
business shall immediately become subject to 240.13d-1(a) or 240.13d-1(c)
(if the person satisfies the requirements specified in 240.13d-1(c)), and
240.13d-2(a), (b) or (d), and shall file, within 10 days thereafter, a
statement on Schedule 13D (240.13d-101) or amendment to Schedule 13G, as
applicable, if the person is a beneficial owner at that time of more than
five percent of the class of equity securities.
(h) Any person who has filed a Schedule 13D (240.13d-101) pursuant
to paragraph (e), (f) or (g) of this section may again report its
beneficial ownership on Schedule 13G (240.13d-102) pursuant to paragraphs
(b) or (c) of this section provided the person qualifies thereunder, as
applicable, by filing a Schedule 13G (240.13d-102) once the person
determines that the provisions of paragraph (e), (f) or (g) of this section
no longer apply.
* * * * *
======END OF PAGE 44======
3. By amending 240.13d-2 by revising paragraphs (a), (b), and the
note to 240.13d-2; redesignating paragraph (c) as paragraph (e), and
adding paragraphs (c) and (d) to read as follows:
240.13d-2 Filing of amendments to Schedules 13D or 13G.
(a) If any material change occurs in the facts set forth in the
Schedule 13D (240.13d-101) required by 240.13d-1(a), including, but not
limited to, any material increase or decrease in the percentage of the
class beneficially owned, the person or persons who were required to file
the statement shall promptly file or cause to be filed with the Commission
an amendment disclosing that change. An acquisition or disposition of
beneficial ownership of securities in an amount equal to one percent or
more of the class of securities shall be deemed "material" for purposes of
this section; acquisitions or dispositions of less than those amounts may
be material, depending upon the facts and circumstances.
(b) Notwithstanding paragraph (a) of this section, and provided that
the person filing a Schedule 13G (240.13d-102) pursuant to 240.13d-1(b)
or 240.13d-1(c) continues to meet the requirements set forth therein, any
person who has filed a Schedule 13G (240.13d-102) pursuant to 240.13d-
1(b), 240.13d-1(c) or 240.13d-1(d) shall amend the statement within
forty-five days after the end of each calendar year if, as of the end of
the calendar year, there are any changes in the information reported in the
previous filing on that Schedule; Provided, however, That an amendment need
not be filed with respect to a change in the percent of class outstanding
previously reported if the change results solely from a change in the
aggregate number of securities outstanding. Once an amendment has been
filed reflecting beneficial ownership of five percent or less of the class
======END OF PAGE 45======
of securities, no additional filings are required unless the person
thereafter becomes the beneficial owner of more than five percent of the
class and is required to file pursuant to 240.13d-1.
(c) Any person relying on 240.13d-1(b) that has filed its initial
Schedule 13G (240.13d-102) pursuant to that paragraph shall, in addition
to filing any amendments pursuant to 240.13d-2(b), file an amendment on
Schedule 13G (240.13d-102) within 10 days after the end of the first month
in which the person's direct or indirect beneficial ownership, computed as
of the last day of the month, exceeds 10 percent of the class of equity
securities. Thereafter, that person shall, in addition to filing any
amendments pursuant to 240.13d-2(b), file an amendment on Schedule 13G
(240.13d-102) within 10 days after the end of the first month in which the
person's direct or indirect beneficial ownership, computed as of the last
day of the month, increases or decreases by more than five percent of the
class of equity securities. Once an amendment has been filed reflecting
beneficial ownership of five percent or less of the class of securities, no
additional filings are required by this paragraph (c).
(d) Any person relying on 240.13d-1(c) and has filed its initial
Schedule 13G (240.13d-102) pursuant to that paragraph shall, in addition
to filing any amendments pursuant to 240.13d-2(b), file an amendment on
Schedule 13G (240.13d-102) promptly upon acquiring, directly or
indirectly, greater than 10 percent of a class of equity securities
specified in 240.13d-1(d), and thereafter promptly upon increasing or
decreasing its beneficial ownership by more than five percent of the class
of equity securities. Once an amendment has been filed reflecting
======END OF PAGE 46======
beneficial ownership of five percent or less of the class of securities, no
additional filings are required by this paragraph (d).
* * * * *
Note to 240.13d-2: For persons filing a short-form statement
pursuant to Rule 13d-1(b) or (c), see also Rules 13d-1(e), (f),
and (g).
4. By amending 240.13d-3 by revising paragraph (d)(1)(ii) to read
as follows:
240.13d-3 Determination of beneficial ownership.
* * * * *
(d) * * *
(1) * * *
(ii) Paragraph (d)(1)(i) of this section remains applicable for the
purpose of determining the obligation to file with respect to the
underlying security even though the option, warrant, right or convertible
security is of a class of equity security, as defined in 240.13d-1(i), and
may therefore give rise to a separate obligation to file.
* * * * *
5. By adding 240.13d-7 to read as follows:
240.13d-7 Dissemination.
One copy of the Schedule filed pursuant to 240.13d-1 and 240.13d-2
shall be sent to the issuer of the security at its principal executive
office, by registered or certified mail. A copy of Schedules filed
pursuant to 240.13d-1(a) and 240.13d-2(a) shall also be sent to each
national securities exchange where the security is traded.
======END OF PAGE 47======
6. By amending 240.13d-101 by revising the language preceding the
first box on the cover page, revising the note on the cover page, revising
Instruction (2) for the Cover Page, and in Item 7 revise the cite "Rule
13d-1(f) (240.13d-1(f))" to read 240.13d-1(k)" to read as follows:
240.13d-101 Schedule 13D - Information to be included in statements filed
pursuant to 240.13d-1(a) and amendments thereto filed pursuant to
240.13d-2(a).
* * * * *
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of 240.13d-1(e), 240.13d-1(f) or 240.13d-
1(g), check the following box.
* * * * *
NOTE: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See 240.13d-7(b)
for other parties to whom copies are to be sent.
* * * * *
Instructions for Cover Page
* * * * *
(2) If any of the shares beneficially owned by a reporting person are
held as a member of a group and the membership is expressly affirmed,
please check row 2(a). If the reporting person disclaims membership in a
group or describes a relationship with other person but does not affirm the
existence of a group, please check row 2(b) [unless it is a joint filing
pursuant to Rule 13d-1(k)(1) in which case it may not be necessary to check
row 2(b)].
======END OF PAGE 48======
* * * * *
7. By amending 240.13d-102 by revising the section heading, before
the first paragraph on the cover page add a line for the date of the
reportable event and boxes to check for the appropriate filing provision,
revising Instruction (2) for the Cover Page, revising Instruction A
following the Notes, revising Items 3, 4, 8, and 10, and revising the Note
at the end of the schedule, to read as follows:
240.13d-102 Schedule 13G - Information to be included in statements filed
pursuant to 240.13d-1(b), (c) and (d) and amendments thereto filed
pursuant to 240.13d-2.
* * * * *
___________________________________________________________
(Date of Event Which Requires Filing of this Statement)
Check the appropriate box to designate the rule pursuant to which this
Schedule is filed:
[ ] Rule 13d-1(b)
[ ] Rule 13d-(c)
[ ] Rule 13d-1(d)
* * * * *
Instructions for Cover Page
* * * * *
(2) If any of the shares beneficially owned by a reporting person are
held as a member of a group and that membership is expressly affirmed,
please check row 2(a). If the reporting person disclaims membership in a
group or describes a relationship with other person but does not affirm the
existence of a group, please check row 2(b) [unless it is a joint filing
======END OF PAGE 49======
pursuant to Rule 13d-1(k)(1) in which case it may not be necessary to check
row 2(b)].
* * * * *
Notes
* * * * *
Instructions. A. Statements filed pursuant to Rule 13d-1(b)
containing the information required by this schedule shall be filed not
later than February 14 following the calendar year covered by the statement
or within the time specified in Rules 13d-1(b)(2) and 13d-2(c). Statements
filed pursuant to Rule 13d-1(c) shall be filed within the time specified in
Rules 13d-1(c), 13d-2(b) and 13d-2(d). Statements filed pursuant to Rule
13d-1(c) shall be filed not later than February 14 following the calendar
year covered by the statement pursuant to Rules 13d-1(d) and 13d-2(b).
* * * * *
Item 3. If this statement is filed pursuant to 240.13d-1(b) or
240.13d-2(b) or (c), check whether the person filing is a:
(a) [ ] Broker or dealer registered under section 15 of the Act (15
U.S.C. 78o).
(b) [ ] Bank as defined in section 3(a)(6) of the Act (15 U.S.C.
78c).
(c) [ ] Insurance company as defined in section 3(a)(19) of the Act
(15 U.S.C. 78c).
(d) [ ] Investment company registered under section 8 of the
Investment Company Act of 1940 (15 U.S.C 80a-8).
(e) [ ] An investment adviser in accordance with 240.13d-
1(b)(1)(ii)(E);
======END OF PAGE 50======
(f) [ ] An employee benefit plan or endowment fund in accordance
with 240.13d-1(b)(1)(ii)(F);
(g) [ ] A parent holding company or control person in accordance
with 240.13d-1(b)(1)(ii)(G);
(h) [ ] A savings associations as defined in Section 3(b) of the
Federal Deposit Insurance Act (12 U.S.C. 1813);
(i) [ ] A church plan that is excluded from the definition of an
investment company under section 3(c)(14) of the Investment Company Act of
1940 (15 U.S.C. 80a-3);
(j) [ ] Group, in accordance with 240.13d-1(b)(1)(ii)(J).
If this statement is filed pursuant to 240.13d-1(c), check this box.
[ ]
Item 4. Ownership.
Provide the following information regarding the aggregate number and
percentage of the class of securities of the issuer identified in Item 1.
(a) Amount beneficially owned: ________.
(b) Percent of class: _________.
(c) Number of shares as to which the person has:
(i) Sole power to vote or to direct the vote ________.
(ii) Shared power to vote or to direct the vote ________.
(iii) Sole power to dispose or to direct the disposition of ________.
(iv) Shared power to dispose or to direct the disposition of
________.
Instruction. For computations regarding securities which represent a
right to acquire an underlying security see 240.13d-3(d)(1).
* * * * *
======END OF PAGE 51======
Item 8. Identification and Classification of Members of the Group.
If a group has filed this schedule pursuant to 240.13d-
1(b)(1)(ii)(J), so indicate under Item 3(h) and attach an exhibit stating
the identity and Item 3 classification of each member of the group. If a
group has filed this schedule pursuant to 240.13d-1(d), attach an exhibit
stating the identity of each member of the group.
* * * * *
Item 10. Certifications.
(a) The following certification shall be included if the statement
is filed pursuant to 240.13d-1(b):
By signing below I certify that, to the best of my knowledge and
belief, the securities referred to above were acquired and are held in the
ordinary course of business and were not acquired and are not held for the
purpose of or with the effect of changing or influencing the control of the
issuer of the securities and were not acquired and are not held in
connection with or as a participant in any transaction having that purpose
or effect.
(b) The following certification shall be included if the statement
is filed pursuant to 240.13d-1(c):
By signing below I certify that, to the best of my knowledge and
belief, the securities referred to above were not acquired and are not held
for the purpose of or with the effect of changing or influencing the
control of the issuer of the securities and were not acquired and are not
held in connection with or as a participant in any transaction having that
purpose or effect.
* * * * *
======END OF PAGE 52======
NOTE: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See 240.13d-7(b)
for other parties for whom copies are to be sent.
* * * * *
8. By amending 240.16a-1 to revise paragraphs (a)(1)(i), (ii),
(iii), (iv), (v), (vi) and (vii), redesignate paragraph (a)(1)(viii) as
paragraph (a)(1)(xi) and to add paragraphs (a)(1)(viii), (ix) and (x) to
read as follows:
240.16a-1 Definition of Terms
* * * * *
(a) * * *
(1) * * *
(i) A broker or dealer registered under section 15 of the Act (15
U.S.C. 78o);
(ii) A bank as defined in section 3(a)(6) of the Act (15 U.S.C. 78c);
(iii) An insurance company as defined in section 3(a)(19) of the Act
(15 U.S.C. 78c);
(iv) An investment company registered under section 8 of the
Investment Company Act of 1940 (15 U.S.C. 80a-8);
(v) Any person registered as an investment adviser under Section 203
of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3) or under the laws
of any state;
(vi) An employee benefit plan as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. 1001
et seq. ("ERISA") that is subject to the provisions of ERISA, or any such
plan that is not subject to ERISA that is maintained primarily for the
======END OF PAGE 53======
benefit of the employees of a state or local government or instrumentality,
or an endowment fund;
(vii) A parent holding company or control person, provided the
aggregate amount held directly by the parent or control person, and
directly and indirectly by their subsidiaries or affiliates that are not
persons specified in paragraphs (a)(1)(i) through (ix), does not exceed one
percent of the securities of the subject class;
(viii) A savings association as defined in Section 3(b) of the Federal
Deposit Insurance Act (12 U.S.C. 1813);
(ix) A church plan that is excluded from the definition of an
investment company under section 3(c)(14) of the Investment Company Act of
1940 (15 U.S.C. 80a-3); and
(x) A group, provided that all the members are persons specified in
240.16a-1(a)(1)(i) through (ix).
* * * * *
By the Commission.
Jonathan G. Katz
Secretary
January 12, 1998
======END OF PAGE 54======