98-1084. Amendments to Beneficial Ownership Reporting Requirements  

  • [Federal Register Volume 63, Number 11 (Friday, January 16, 1998)]
    [Rules and Regulations]
    [Pages 2854-2868]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 98-1084]
    
    
    
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    _______________________________________________________________________
    
    Part V
    
    
    
    
    
    Securities and Exchange Commission
    
    
    
    
    
    _______________________________________________________________________
    
    
    
    17 CFR Part 240
    
    
    
    Amendments to Beneficial Ownership Reporting Requirements; Final Rule
    
    Federal Register / Vol. 63, No. 11 / Friday, January 16, 1998 / Rules 
    and Regulations
    
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    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 rule.
    
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    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.
    
    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'').
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        \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\ K 17 CFR 240.13d-101 and 240.240.13d-102.
        \3\ 17 CFR 240.16a-1.
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    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.
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        \4\ See fn. 9, infra.
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        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\
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        \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.
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    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 
    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
    
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    13D.\11\ Qualified Institutional Investors remain eligible to file 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).
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        \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 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 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).
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        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 Investors to amend in a manner similar, but more 
    promptly than, Qualified Institutional Investors reporting on Schedule 
    13G.\12\
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        \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, 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.
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        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 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\
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        \13\ See Sections II.C. and II.D. infra.
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        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. 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.
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        \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 prompt. See In the Matter of Cooper Laboratories, Inc., Release 
    No. 34-22171 (June 26, 1985).
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        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 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
    
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    the issuer or any person controlling the issuer.
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        \15\ Rule 13d-1(e).
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        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.
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        \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.
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    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.
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        \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.
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        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\
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        \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.
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        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-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.
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        \21\ Rule 13d-1(h).
        \22\ Rule 13d-1(b).
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        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.
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        \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.
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    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
    
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    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.
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        \24\ See Exchange Act Release No. 14692 (April 21, 1978) [43 FR 
    18484].
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        The Commission is not expanding the list of qualified institutional 
    investors to include foreign institutions. The Passive Investor 
    provisions 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.
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        \25\ See Section II.B. above.
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    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 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.
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        \26\ Title V, Section 508.
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        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 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\
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        \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.
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        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\
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        \28\ This amendment under Section 16 codifies the interpretive 
    position set forth in Edward C. Johnson 3d., (available August 20, 
    1991).
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        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. 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.
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        \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.
    ---------------------------------------------------------------------------
    
        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\
    ---------------------------------------------------------------------------
    
        \30\ Likewise, under these circumstances, attribution may not be 
    required under Rule 16a-1(a)(1).
    ---------------------------------------------------------------------------
    
        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 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
    
    [[Page 2858]]
    
    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.
    ---------------------------------------------------------------------------
    
        \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).
    ---------------------------------------------------------------------------
    
        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 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\
    ---------------------------------------------------------------------------
    
        \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.
    ---------------------------------------------------------------------------
    
        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.
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        \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.
    ---------------------------------------------------------------------------
    
    6. Investment Advisers Prohibited From Registering Under the Investment 
    Advisers Act of 1940 Pursuant to Section 203A of That Act
        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.
    ---------------------------------------------------------------------------
    
        \34\ Pub. L. No. 104-290, 110 Stat. 3416 (1996) (codified in 
    scattered sections of the United States Code).
    ---------------------------------------------------------------------------
    
        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
    
        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 
    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
    
    [[Page 2859]]
    
    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 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 Rule 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 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
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        \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.
    ---------------------------------------------------------------------------
    
    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 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
    ---------------------------------------------------------------------------
    
        \37\ Schedules 13D will, however, continue to be sent to each 
    exchange on which the security is traded, which is a statutory 
    requirement.
    ---------------------------------------------------------------------------
    
        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.
        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).
    ---------------------------------------------------------------------------
    
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    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.
    ---------------------------------------------------------------------------
    
        \38\ See Exchange Act Release No. 7331 (September 24, 1996).
    ---------------------------------------------------------------------------
    
        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 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 
    (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.
        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 rules.43 
    Each Schedule 13G would impose an estimated burden of 10 hours for a 
    total annual burden of 90,440 hours.
    ---------------------------------------------------------------------------
    
        \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.
        \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.
    ---------------------------------------------------------------------------
    
        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
    
    [[Page 2865]]
    
    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. Sec. 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 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
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        \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 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.
    ---------------------------------------------------------------------------
    
        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 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
    
        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 Sec. 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:
    
    
    Sec. 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 
    (Sec. 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 (Sec. 240.13d-
    101) may, in lieu thereof, file with the Commission, a short-form 
    statement on Schedule 13G (Sec. 240.13d-102), Provided, That:
        (i) * * *
        (ii) Such person is:
        (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 Sec. 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);
    
    [[Page 2866]]
    
        (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
        (J) A group, provided that all the members are persons specified in 
    Sec. 240.13d-1(b)(1)(ii)(A) through (I); and
        (iii) * * *
        (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 (Sec. 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 (Sec. 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 Sec. 240.13d-
    3(b);
        (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 (Sec. 240.13d-102).
        (e)(1) Notwithstanding paragraphs (b) and (c) of this section and 
    Sec. 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 (Sec. 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 
    Secs. 240.13d-1(a) and 240.13d-2(a) and shall file a statement on 
    Schedule 13D (Sec. 240.13d-101) within 10 days if, and shall remain 
    subject to those requirements for so long as, the person:
        (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 Sec. 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 Sec. 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 (Sec. 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 
    Sec. 240.13d-2(b), persons reporting on Schedule 13G (Sec. 240.13d-102) 
    pursuant to paragraph (c) of this section shall immediately become 
    subject to Secs. 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 (Sec. 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 date of the filing of the Schedule 13D (Sec. 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 (Sec. 240.13d-102) pursuant to paragraph (b) 
    of this section, or has become obligated to report on the Schedule 13G 
    (Sec. 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 
    Sec. 240.13d-1(a) or Sec. 240.13d-1(c) (if the person satisfies the 
    requirements specified in Sec. 240.13d-1(c)), and Secs. 240.13d-2 (a), 
    (b) or (d), and shall file, within 10 days thereafter, a statement on 
    Schedule 13D (Sec. 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 (Sec. 240.13d-101) 
    pursuant to paragraph (e), (f) or (g) of this section may again report 
    its beneficial ownership on Schedule 13G (Sec. 240.13d-102) pursuant to 
    paragraphs (b) or (c) of this section provided the person qualifies 
    thereunder, as applicable, by filing a Schedule 13G (Sec. 240.13d-102) 
    once the person determines that the provisions of paragraph (e), (f) or 
    (g) of this section no longer apply.
    * * * * *
        3. By amending Sec. 240.13d-2 by revising paragraphs (a), (b), and 
    the note to Sec. 240.13d-2; redesignating paragraph (c) as paragraph 
    (e), and adding paragraphs (c) and (d) to read as follows:
    
    
    Sec. 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 (Sec. 240.13d-101) required by Sec. 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
    
    [[Page 2867]]
    
    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 (Sec. 240.13d-102) pursuant to 
    Sec. 240.13d-1(b) or Sec. 240.13d-1(c) continues to meet the 
    requirements set forth therein, any person who has filed a Schedule 13G 
    (Sec. 240.13d-102) pursuant to Sec. 240.13d-1(b), Sec. 240.13d-1(c) or 
    Sec. 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 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 Sec. 240.13d-
    1.
        (c) Any person relying on Sec. 240.13d-1(b) that has filed its 
    initial Schedule 13G (Sec. 240.13d-102) pursuant to that paragraph 
    shall, in addition to filing any amendments pursuant to Sec. 240.13d-
    2(b), file an amendment on Schedule 13G (Sec. 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 Sec. 240.13d-2(b), file an amendment on Schedule 13G 
    (Sec. 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 Sec. 240.13d-1(c) and has filed its 
    initial Schedule 13G (Sec. 240.13d-102) pursuant to that paragraph 
    shall, in addition to filing any amendments pursuant to Sec. 240.13d-
    2(b), file an amendment on Schedule 13G (Sec. 240.13d-102) promptly 
    upon acquiring, directly or indirectly, greater than 10 percent of a 
    class of equity securities specified in Sec. 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 beneficial ownership of 
    five percent or less of the class of securities, no additional filings 
    are required by this paragraph (d).
    * * * * *
        Note to Sec. 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 Sec. 240.13d-3 by revising paragraph (d)(1)(ii) to 
    read as follows:
    
    
    Sec. 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 
    Sec. 240.13d-1(i), and may therefore give rise to a separate obligation 
    to file.
    * * * * *
        5. By adding Sec. 240.13d-7 to read as follows:
    
    
    Sec. 240.13d-7  Dissemination.
    
        One copy of the Schedule filed pursuant to Secs. 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 Secs. 240.13d-1(a) and 240.13d-2(a) shall also be 
    sent to each national securities exchange where the security is traded.
        6. By amending Sec. 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) ``(Sec. 240.13d-1(f))'' to read ``Sec. 240.13d-
    1(k)'' as follows:
    
    
    Sec. 240.13d-101  Schedule 13D--Information to be included in 
    statements filed pursuant to Sec. 240.13d-1(a) and amendments thereto 
    filed pursuant to Sec. 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 Secs. 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 Sec. 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)].
    * * * * *
        7. By amending Sec. 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:
    
    
    Sec. 240.13d-102  Schedule 13G--Information to be included in 
    statements filed pursuant to Sec. 240.13d-1(b), (c) and (d) and 
    amendments thereto filed pursuant to Sec. 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 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
    
    [[Page 2868]]
    
    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 Secs. 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 Sec. 240.13d-
    1(b)(1)(ii)(E);
        (f) [ ] An employee benefit plan or endowment fund in accordance 
    with Sec. 240.13d-1(b)(1)(ii)(F);
        (g) [ ] A parent holding company or control person in accordance 
    with Sec. 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 Sec. 240.13d-1(b)(1)(ii)(J).
        If this statement is filed pursuant to Sec. 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 Sec. 240.13d-3(d)(1).
    * * * * *
    
    Item 8. Identification and Classification of Members of the Group
    
        If a group has filed this schedule pursuant to Sec. 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 Sec. 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 Sec. 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 Sec. 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.
    * * * * *
        Note: Schedules filed in paper format shall include a signed 
    original and five copies of the schedule, including all exhibits. 
    See Sec. 240.13d-7(b) for other parties for whom copies are to be 
    sent.
    * * * * *
        8. By amending Sec. 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:
    
    
    Sec. 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 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 
    Sec. 240.16a-1(a)(1)(i) through (ix).
    * * * * *
        By the Commission.
    
        Dated: January 12, 1998.
    Jonathan G. Katz,
    Secretary.
    [FR Doc. 98-1084 Filed 1-15-98; 8:45 am]
    BILLING CODE 8010-01-P
    
    
    

Document Information

Effective Date:
2/17/1998
Published:
01/16/1998
Department:
Securities and Exchange Commission
Entry Type:
Rule
Action:
Final rule.
Document Number:
98-1084
Dates:
The amendments are effective February 17, 1998.
Pages:
2854-2868 (15 pages)
Docket Numbers:
Release No. 34-39538, File No. S7-16-96, International Series--1111
RINs:
3235-AG81: Amendments to Beneficial Ownership Reporting Requirements
RIN Links:
https://www.federalregister.gov/regulations/3235-AG81/amendments-to-beneficial-ownership-reporting-requirements
PDF File:
98-1084.pdf
CFR: (14)
17 CFR 240.16a-1(a)(1)(i)
17 CFR 240.13d-1(a)
17 CFR 240.13d-2(b)
17 CFR 240.13d-1(b)
17 CFR 240.13d-1(d)
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