Schedule 13D

Definition

Schedule 13D is a filing requirement required by the Securities and Exchange Commission (SEC) for investors who buy more than 5% of a company’s outstanding shares. 

What is Schedule 13D?

Schedule 13D is a disclosure form used to inform the public and the SEC about significant ownership stakes in publicly traded companies. The purpose of Schedule 13D is to provide transparency regarding large amounts of shares, which can impact the control and direction of a company.

When an investor or group of investors buys more than 5% of a company’s outstanding shares with the intent of influencing corporate governance or strategic decisions, they are required to file Schedule 13D with the SEC. This filing must be made within ten days of the acquisition.

Schedule 13D requires filers to disclose detailed information about their ownership stake, including the number of shares acquired, the percentage of the company’s outstanding shares held, the purpose of the acquisition, and any plans or proposals for changes in corporate control or management. Furthermore, investors must include their names, addresses, and relationship to the company. 

Schedule 13D filings are publicly available through the SEC’s Electronic Data Gathering, Analysis, and Retrieval system, allowing investors, analysts, regulators, and the public to monitor changes in ownership and potential corporate activism.

Example of Schedule 13D

Let’s say an investment firm, XYZ Capital, acquires a 6% stake in ABC Corporation’s voting shares. As per SEC regulations, XYZ Capital must file a Schedule 13D to disclose this ownership stake. The Schedule 13D would include information such as XYZ Capital’s identity, the purpose of the acquisition, any plans or proposals for ABC Corporation, and details about the transaction.