[Federal Register Volume 61, Number 134 (Thursday, July 11, 1996)]
[Proposed Rules]
[Pages 36521-36534]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17579]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 240
[Release No. 34-37403; File No. S7-16-96; International Series--1001]
RIN 3235-AG81
Amendments to Beneficial Ownership Reporting Requirements
AGENCY: Securities and Exchange Commission.
ACTION: Reproposed rules.
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SUMMARY: In accordance with a recent recommendation of the Report of
the Task Force on Disclosure Simplification published March 5, 1996,
the Securities and Exchange Commission (``Commission'') today is
publishing for comment a proposal to amend the rules relating to the
reporting of beneficial ownership in publicly-held companies. Similar
amendments were proposed in 1989 but were not acted upon by the
Commission. These reproposals would make 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 or held the
securities for the purpose of and do not have the effect of changing or
influencing the control of the issuer of the securities. The purposes
of the reproposals are to improve the effectiveness of the beneficial
ownership reporting scheme and to reduce the reporting obligations of
passive investors.
DATES: Comments should be received on or before September 9, 1996.
ADDRESSES: Comments should be submitted in triplicate to Jonathan G.
Katz, Secretary, U.S. Securities and Exchange Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549. Comments may also be submitted
electronically at the following e-mail address: rule-comments@sec.gov.
Comment letters should refer to File No. S7-16-96; this file number
should be
[[Page 36522]]
included on the subject line if e-mail is used. All comments received
will be available for public inspection and copying in the Commission's
public reference room at the same address. Electronically submitted
comments will be posted on the Commission's Internet web site (http://
www.sec.gov).
FOR FURTHER INFORMATION CONTACT: Dennis O. Garris, Special Counsel,
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 Commission is reproposing for comment
amendments to Regulation 13D-G 1 and Schedules 13D and 13G.
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\1\ Rules 13d-1, 13d-2, and 13d-7 [17 CFR 240.13d-1, 240.13d-2,
and 240.13d-7].
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I. Background and Overview
A. Current Regulatory Scheme
The beneficial ownership reporting requirements embodied in
Sections 13(d) 2 and 13(g) 3 of the Securities Exchange Act
of 1934 (``Exchange Act'') 4 and the regulations adopted
thereunder 5 are intended to provide investors and the subject
issuer with information about accumulations of securities that may have
the potential to change or influence control of the issuer. The
statutory and regulatory framework also establishes a comprehensive
reporting system for gathering and disseminating information about the
ownership of equity securities.6 These provisions require, subject
to exceptions, that any person who acquires beneficial ownership of
more than five percent of a class of equity securities registered under
Section 12 of the Exchange Act 7 and other specified equity
securities (collectively, ``subject securities'') report such
acquisition on Schedule 13D within 10 calendar days. That report must
be amended promptly to report any material change in the information
provided, including any acquisition or disposition of one percent or
more of the class.8 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) (``Exempt
Investors''),9 are required instead to file and amend a short-form
Schedule 13G within 45 days after the close of the calendar year. The
Schedule 13G and amendments need only report securities that are
beneficially owned as of the last day of the year.
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\2\ 15 U.S.C. 78m(d).
\3\ 15 U.S.C. 78m(g).
\4\ 15 U.S.C. 78a et seq.
\5\ Regulation 13D-G, Rules 13d-1 through 13d-7 [17 CFR 240.13d-
1 through 240.13d-7].
\6\ For a more extensive discussion of Sections 13(d) and 13(g),
and Regulation 13D-G adopted to implement both statutory provisions,
see Securities Exchange Act Release No. 26598 (March 8, 1989) [54 FR
10552] (``Proposing Release'').
\7\ 15 U.S.C. 781.
\8\ Rule 13d-2(a).
\9\ Persons who acquire all their securities prior to the issuer
registering 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.
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Schedule 13G is also available to specified institutional investors
(``Qualified Institutional Investors'') 10 that acquired or hold
the securities in the ordinary course of business and without a purpose
or effect or in connection with a transaction having a purpose or
effect, of changing or influencing control of the issuer. These
Qualified Institutional Investors likewise only report their greater
than five percent positions held as of the close of the year either in
an initial report or amendment in the case of any change in the
information provided, except if they own more than 10 percent as of the
close of any month, in which case a Schedule 13G must be filed or
amended within 10 calendar days reporting the holdings as of the close
of the month.11 These flexible reporting requirements are designed
to minimize the costs of monitoring positions in securities acquired in
the ordinary course of the investor's business.
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\10\ Such specified 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)].
\11\ Rule 13d-1(b)(2).
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B. Proposals for Reform
In 1989, the Commission proposed amendments to Regulation 13D-G to
improve the effectiveness of the reporting scheme and to lessen the
compliance costs to investors that have not acquired or held the
securities with the purpose or effect of changing or influencing the
control of the issuer.12 The 1989 proposed amendments were not
acted upon by the Commission. The amendments proposed today are similar
to the 1989 proposals except, as more fully discussed below, the
Commission is not reproposing a limitation on the amount of securities
that a Qualified Institutional Investor can report on Schedule 13G and
the Commission is proposing that the new class of persons that would be
eligible to use Schedule 13G would have the same amendment requirements
that currently apply to Schedule 13D filings, as opposed to the more
liberal amendment requirements currently applicable to Schedule 13G.
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\12\ Exchange Act Release No. 26598 (March 8, 1989) [54 FR
10552]. The Commission received fifteen comment letters which are
available for public inspection and copying at the Commission's
Public Reference Room in Washington, D.C. (File No. S7-8-89).
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The current reporting scheme requires most persons other than
institutions to file detailed disclosure reports regardless of the
reasons for the acquisition. As a result, the current reporting scheme
may place unnecessary disclosure burdens on persons whose acquisitions
do not implicate the Williams Act's concern with transactions affecting
the control of issuers. To further the Commission's goals of disclosure
simplification and efficiency, as stated in the Report of the Task
Force on Disclosure Simplification published March 5, 1996, the
amendments are being reproposed at this time to improve the
effectiveness of the beneficial ownership reporting scheme and to
reduce the reporting obligations of all investors that acquire or hold
the securities without the purpose or the effect of changing or
influencing control of the issuer by permitting them for the first time
to report on Schedule 13G. Since the Commission first proposed to
exempt investors that do not have a disqualifying purpose or effect
from the Schedule 13D filing requirements, initial Schedule 13D filings
have increased from 2,850 in fiscal 1988 to 3,347 in fiscal 1995, a 17
percent increase. Data provided by the Commission's Office of Economic
Analysis indicates that 76 percent of the Schedules 13D studied by that
office did not disclose a purpose or effect of changing or influencing
control of the issuer and, therefore, would benefit from the amendments
proposed today.13 The reduced number of Schedule 13D filings would
allow the marketplace, as well as the staff of the Commission, to focus
more quickly on acquisitions
[[Page 36523]]
involving the potential to change or influence control.
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\13\ The sample included 110 Schedules 13D filed from November
10, 1994 to December 30, 1994.
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Accordingly, in addition to the two existing categories of Schedule
13G filers (Qualified Institutional Investors and Exempt Investors), a
third category (``Passive Investors'') 14 would be created,
significantly expanding the classes of persons eligible to file on the
short form. Any person who acquires or holds more than five percent of
a class of subject securities and does not have a disqualifying purpose
or effect would be permitted to file a short-form report on Schedule
13G within 10 calendar days after the acquisition, rather than the
long-form report on Schedule 13D.15 A Qualified Institutional
Investor would remain eligible to file a short-form report on Schedule
13G 45 days after the year's end, provided that the requirements of
amended Rule 13d-1(b)(1) are satisfied. Exempt Investors would 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 Rule
13d-1(c).
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\14\ 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
proposed Rule 13d-1(b)(2) 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''.
\15\ Schedule 13D requires more disclosure than Schedule 13G.
The following are the primary disclosures required by Schedule 13D
that are not required by Schedule 13G: (i) the source and amount of
funds used to purchase the securities; (ii) the purpose of the
acquisition of the securities and any plans or proposals that the
reporting person has involving the issuer including, among other
things, extraordinary transactions and changes of control; (iii) a
description of transactions in the securities reported on in the
sixty days prior to the filing of the schedule; (iv) a description
of any contracts or arrangements involving the securities of the
issuer; and, (v) a requirement to file copies of any written
contracts or arrangements described in the Schedule 13D as exhibits
to the schedule.
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The rule amendments would subject Passive Investors filing Schedule
13G in lieu of Schedule 13D to the same amendment requirements that
currently apply to Schedule 13D. Additionally, Passive Investors would
be subject to a proposed 20 percent limit on the amount of an issuer's
securities that may be reported on Schedule 13G and would be required
to file a Schedule 13D within 10 calendar days of acquiring 20 percent
or more of the securities. Upon acquiring 20 percent or more, the
investor would be prohibited from acquiring additional securities or
from voting or directing the voting of the securities until filing that
schedule (a ``standstill period''). The Commission is not reproposing a
percentage limit to reporting on Schedule 13G for Qualified
Institutional Investors.
Under the proposed amendments, Passive Investors that are no longer
able to certify that they did not acquire or do not hold with a
disqualifying purpose or effect would be required to file a Schedule
13D within 10 calendar days of the change in purpose. An investor
required to file a Schedule 13D because it has changed its investment
purpose would be subject to a waiting period (``cooling-off period'')
from the time of the change in investment purpose until the expiration
of the tenth calendar day from the date of the filing of a Schedule
13D, during which time such person could not vote or direct the voting
of the subject securities, or acquire an additional beneficial
ownership interest in any securities either of the issuer or of any
person controlling the issuer.
In 1992 the Commission revised the proxy rules to exempt certain
communications from the proxy regulation and disclosure requirements.
The 1992 proxy rule amendments were justified in part because Section
13(d) would continue to require disclosure of concerted activities by
and among groups of significant shareholders regarding voting
matters.16 Following the 1992 proxy reform, some commentators have
continued to express the concern that Section 13(d) has a potential
chilling effect on a shareholder's ability to take full advantage of
the proxy rule exemptions, since actions taken pursuant to the proxy
exemptions may be interpreted to be inconsistent with the
certifications necessary for Qualified Institutional Investors to file
on Schedule 13G or such actions may lead to a finding of a ``group''
under Rule 13d-5(b)(1).17 Comment is requested as to whether
Section 13(d) reporting obligations restrict a shareholder's ability to
use the proxy rule exemptions and whether relief, in addition to that
proposed today, from Schedule 13D filing obligations with respect to
soliciting activities is necessary and appropriate.
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\16\ See Exchange Act Release No. 31326, Section I (October 16,
1992) [57 FR 48276]; testimony of Richard C. Breeden, Chairman of
the Securities and Exchange Commission, before the Subcommittee on
Securities of the Committee on Banking, Housing, and Urban Affairs,
United States Senate (October 17, 1991).
\17\ In April 1994, the Council of Institutional Investors
submitted a rulemaking petition to allow institutions that incur a
Schedule 13D filing obligation as a result of exempt soliciting
activities to report their beneficial ownership on a short form
instead. The petition requested relief from Section 13(d) filing
obligations for Schedule 13G eligible shareholders participating in
communications covered by the two principal exemptions from the
proxy rules. Under the petition, persons engaged in exempt
solicitations would only be required to file a new short form
disclosure statement and they would not lose their Schedule 13G
eligibility. The petition is available for inspection and copying at
the Commission's Public Reference Room in Washington, D.C. (File 4-
372).
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Finally, the Commission is proposing amendments to the schedules
and technical amendments to the beneficial ownership rules along with
additional related and clarifying amendments.
II. Proposed Amendments to Regulation 13D-G
A. Expansion of the Class of Investors Eligible to Report on Schedule
13G
The Commission is reproposing that Regulation 13D-G be amended to
permit Passive Investors to use the short-form Schedule 13G.18
Passive Investors would file the Schedule within 10 calendar days after
acquiring beneficially more than five percent of a class of subject
securities. Persons unable or unwilling to certify that they do not
have a disqualifying purpose or effect because, for example, the
possibility exists that they may seek to exercise or influence control,
would be ineligible to file a Schedule 13G and would be required to
file a Schedule 13D. The comment letters on the 1989 proposals
reflected significant consensus supporting the Commission's expansion
of the eligible class of Schedule 13G filers.19
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\18\ Proposed Rule 13d-1(b)(2).
\19\ Of the 15 comment letters received by the Commission on the
proposals, 13 commenters generally supported the expansion and two
commenters opposed the expansion.
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The Commission is reproposing that Passive Investors be allowed to
choose whether to report on Schedule 13G or Schedule 13D.20 The
Commission preliminarily believes that Passive Investors should be
given the flexibility to determine which Schedule is most appropriate
given their circumstances. The fact that an investor can represent
[[Page 36524]]
that it does not have a disqualifying purpose or effect but still
chooses to file on a Schedule 13D may provide important information
concerning the filing person's intent. Accordingly, the Commission is
reproposing that the use of Schedule 13G, in lieu of Schedule 13D,
remain optional for those persons eligible to use Schedule 13G.
However, the Commission requests comment as to the appropriateness of
this approach and whether Schedule 13G eligible persons would choose to
file on Schedule 13D to avoid the cooling-off period upon a change in
investment purpose. Comment is also requested as to whether a mandatory
filing approach would better serve the market by allowing investors to
focus on those acquisitions that presently represent an attempt to
influence or change control of the issuer.
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\20\ In the 1989 Proposing Release the Commission requested
comment upon whether reporting on a Schedule 13G (as opposed to
Schedule 13D) should be permissive or mandatory for investors that
do not have a disqualifying purpose or effect. Commenters opposing a
mandatory filing requirement suggested that the detailed disclosures
contained in a Schedule 13D may be more appropriate in situations
where the investor's purpose or effect may abruptly change to a
disqualifying purpose or effect and, accordingly, the use of the
Schedule 13D, in lieu of the Schedule 13G, should be optional.
Commenters supporting mandatory use of Schedule 13G believed that
such a requirement would enhance the marketplace's ability to focus
on those acquisitions representing a disqualifying purpose or effect
and would deter Schedule 13G eligible filers from filing on Schedule
13D in order to avoid the cooling-off period upon a change in
purpose or effect.
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B. Filing Periods for Passive Investors Filing on Schedule 13G
As reproposed, Passive Investors choosing to file a Schedule 13G
would file the 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 currently applicable to Schedule 13G filers,
would provide more timely notice to the market and shareholders of the
existence of voting blocks that have the potential of affecting control
of the issuer.
Under the proposed rules, however, Passive Investors filing on
Schedule 13G would still be subject to the same amendment requirements
currently applicable to Schedule 13D.21 This approach differs from
the 1989 proposals, which proposed that Passive Investors filing on
Schedule 13G be subject merely to the more liberal amendment
requirements currently applicable to Qualified Institutional Investors
filing on Schedule 13G.22 One commenter on the 1989 proposals
expressed the concern that the 1989 proposals would not have required
timely disclosure of material changes, including increases in ownership
of the issuer's securities. For example, under the 1989 proposals, a
Passive Investor would only have been required to file an amendment to
the Schedule 13G to disclose an acquisition of ownership in excess of
10 percent of such securities within 10 days after the end of the month
in which the person's ownership exceeded 10 percent of the class as of
the end of the month. The Commission preliminarily believes that,
although Passive Investors do not have a disqualifying purpose or
effect, the market may benefit from more timely notice of material
changes in ownership and material changes in the information previously
reported by such persons.
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\21\ Rule 13d-2(a) requires that an amendment to Schedule 13D be
filed promptly upon any material change in the facts set forth in
the schedule, including any material increase or decrease in the
percentage of the class beneficially owned. Acquisitions or
dispositions of one percent or more of the class are deemed to be
``material'' for the purposes of this rule. Acquisitions or
dispositions of less than one percent of the class may be material
depending upon the facts and circumstances.
\22\ Under Rule 13d-2(b) an amendment to the Schedule 13G would
be due 45 calendar days after the close of the year to report only
any change that occurred in the information previously reported on
Schedule 13G as of the last day of the year. However, under Rule
13d-1(b)(2) 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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In addition, by providing that the market will receive notice of
material changes in the amount beneficially owned by persons filing
under this new category of ``Passive Investors'', there is less of an
incentive for those who may ultimately have a control intent to use
Schedule 13G for the purpose of being able to acquire, for example, up
to 9.9 percent of an issuer's stock without ever triggering any
reporting requirement or disclosure to the market other than, perhaps,
a prior filing of a five percent ownership interest. Likewise, without
this amendment requirement a Passive Investor could increase a
securities holding from just over 10 percent to just under 20 percent
without any reporting or disclosure to the market until 10 days after
the end of the month in which the 15 percent threshold was crossed. In
the past, stock accumulation programs have taken advantage of the
current statutory ``window'' in the Section 13(d) reporting regime.
Comment is requested as to whether providing for current Schedule 13G
amendment procedures as opposed to the more stringent Schedule 13D
amendment procedures, for persons who qualify as Passive Investors,
would exacerbate that problem, thereby decreasing investor protection
and the availability of timely information provided to the market.
Comment is requested as to whether it is necessary to require that
Passive Investors filing on Schedule 13G be subject to the more
stringent amendment requirements currently applicable to Schedule 13D.
Would more frequent amendments by Passive Investors provide
sufficiently useful information to investors, the market and issuers to
justify the filing burden on Passive Investors? Would the proposed
standstill 23 and cooling-off 24 provisions provide
sufficient protection from the abuse noted if the more lenient
amendment requirements were adopted? If so, please explain.
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\23\ Under the proposed rules, Passive Investors would be
required to file a Schedule 13D within 10 days of the date their
beneficial ownership equals or exceeds 20 percent of the class and
would, upon such acquisition, be subject to a standstill period
during which they could not vote their shares or acquire additional
shares of the class until the Schedule 13D is filed. See Section
II.D. infra.
\24\ Under the proposed rules, if a Passive Investor develops a
disqualifying purpose or effect, the investor would be subject to a
cooling-off period until 10 days after the filing of a Schedule 13D
during which period they could not vote their shares or acquire
additional securities. See Section II.C. infra.
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Alternatively, would it be more appropriate to require Passive
Investors to file an annual amendment for any material change in the
information previously reported (like a Qualified Institutional
Investor) but also file an amendment promptly upon acquiring 10 percent
or more? Thereafter, the Passive Investor would promptly report any
change in position of five percent or more (rather than, as with
Qualified Institutional Investors, only five percent changes in
position as of the last day of the month and amending within 10 days
thereafter).25 Should crossing each of these thresholds trigger a
requirement that the Passive Investor cease voting and acquiring
additional securities until the amendment is filed? Would that have any
deterrent effect to the use of Schedule 13G where substantial
acquisitions are planned? Conversely, does the proposed requirement to
report promptly any material changes in position render the proposed 20
percent limitation on the use of Schedule 13G by Passive Investors and
accompanying standstill period unnecessary? The Commission is
considering for adoption each of these combinations of amendment
requirements, cooling-off periods, and standstill periods.
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\25\ One commenter on the 1989 proposals suggested requiring an
amendment at two percent intervals.
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The rules would continue to permit Qualified Institutional
Investors to file the Schedule 13G within 45 days after calendar year
end and without being subject to a 20 percent limitation on their
holdings. Qualified Institutional Investors would continue to be
required to certify that the subject securities were acquired in the
ordinary course of business and not with the purpose nor with the
effect of changing or influencing the control of the issuer.26
[[Page 36525]]
Even where an institutional investor is unable to make the ``ordinary
course of business'' certification 27 it would still be permitted
to file on Schedule 13G under the Passive Investor provision so long as
it does not have a disqualifying purpose or effect. The Passive
Investor provision, however, would require both types of investors,
institutional and non-institutional, to file the Schedule 13G within 10
calendar days of the acquisition. Furthermore, such institutions would
be required to file an amendment to their Schedule 13G within 10
calendar days of that change in status to disclose the change.28
Comment is requested as to whether such institutional investors should
be subject to a standstill period until the filing of the Schedule 13G
amendment. Likewise, an institution unable to make the ``ordinary
course of business'' certification would also be subject to the 20
percent limitation.
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\26\ The Commission proposes to revise the certification on the
Schedule 13G for Qualified Institutional Investors to provide that
such investors certify that the securities were acquired and held in
the ordinary course of business and 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
or held in connection with or as a participant in any transaction
having such purpose or effect (emphasis added). This proposed
amendment to the certification is to conform the language of the
certification to proposed Rule 13d-1(b)(4)(i)(A).
\27\ In 1989, the Commission requested comment on the
appropriateness of continuing to require the ordinary course of
business certification. The sole commenter expressing a view on this
matter stated that the ordinary course of business requirement is
unnecessary when institutional investors acquire subject securities
for passive purposes.
Congress recognized that the Section 13(d) statutory framework
could have a significant impact on the reporting obligations of
certain institutional investors and professionals in the securities
business. Because such persons often acquire securities in the
ordinary course of business and not with a view toward influencing
control, in 1970 Congress specifically provided in Section 13(d)(5)
that the Commission could permit the filing of a short form
acquisition notice upon the determination that the securities were
acquired in the ordinary course of business. Although the Commission
proposes to eliminate that requirement for Passive Investors relying
on proposed Rule 13d-1(b)(2), the certification in its present form
will be retained with respect to institutions relying on the more
liberal filing requirement under Rule 13d-1(b)(1). As a result,
institutions would only have to report beneficial ownership of
equity securities acquired and held in the ordinary course of
business to the extent they owned more than five percent of the
class at year end (or more than 10 percent at the end of any month).
Proposed Rules 13d-1(b)(1) and (3).
\28\ Proposed Rule 13d-1(b)(6)(ii).
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In addition, as reproposed, all Exempt Investors would continue to
be able to file Schedule 13G within 45 days after the close of the
calendar year, and would not be subject to the 20 percent
limitation.29 The exempt holdings do not appear to present a
potential for affecting control of the issuer that should require
earlier notice to the market and shareholders.
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\29\ Proposed Rule 13d-1(c).
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C. 13D Filing Requirement and Cooling-Off Period for Changes in
Investment Purpose or Effect
As reproposed, Qualified Institutional Investors and Passive
Investors that can no longer certify that they do not hold with a
disqualifying purpose or effect must file a Schedule 13D no later than
10 calendar days after the change in investment purpose.30 A
``cooling-off'' period would commence at the time the reporting person
determines that it holds the subject securities with a disqualifying
purpose or effect until the expiration of the tenth calendar day from
the date of the filing of a Schedule 13D. This ``cooling-off'' period
differs from the period currently required for Qualified Institutional
Investors.31 That period does not commence until the date of the
filing of the Schedule 13D and creates a potential window between the
time of the change in the purpose or effect and the ``prompt'' filing
of a Schedule 13D during which the reporting person could acquire
additional shares. As reproposed, the new rule would prohibit any such
purchases from the moment of the change until the expiration of the
tenth calendar day from the date of the filing of the Schedule 13D.
During the cooling-off period, the rule would prohibit a person from
voting or directing the voting of the subject securities or acquiring
beneficial ownership of any equity securities of the issuer or any
person controlling the issuer.32
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\30\ Proposed Rule 13d-1(b)(4)(i).
\31\ See Rule 13d-1(b)(3)(ii).
\32\ In connection with the 1989 proposals, the Commission
requested comment on the necessity of a cooling-off period and
whether 10 calendar days was the appropriate period. Seven
commenters addressed this issue, and all seven generally supported
the concept of a cooling-off period. Four fully supported the 10 day
time frame while two suggested a five day period, and a third
advocated a 20 day period. The Commission also requested comment on
whether the provision would discourage improper Schedule 13G filings
by persons seeking to influence control. Four commenters generally
believed that such a timing requirement would have such an effect;
two other commenters did not agree, in part because of a concern
that investor ``raiders'' may initially characterize themselves as
``passive investors'' and subsequently delay acknowledging their
control intent.
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The Commission preliminarily believes that the reproposed cooling-
off period is necessary and appropriate when the beneficial owner
determines that it now holds the securities with a disqualifying
purpose or effect and may seek to influence control. The earlier
commencement of the cooling-off period would encourage the prompt
filing of a Schedule 13D.33 The cooling-off period would 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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\33\ 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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Comment is again requested on the necessity of the 10 calendar day
cooling-off period. Is the dissemination of information concerning
these filings, even for smaller companies, so rapid and widespread in
the media that such period could be shortened (e.g., to 3 or 5 days)?
One commenter on the 1989 proposals suggested a longer cooling-off
period. Should such period be lengthened (e.g., 15 or 20 days)? Comment
is requested as to the time at which the cooling-off period should
begin--upon the change in purpose or effect, or upon the filing of the
Schedule 13D. If the cooling-off period begins upon the change in
purpose or effect, should it end upon the filing of the Schedule 13D?
D. Twenty-Percent Limit on Ownership Interest Reportable on Schedule
13G and Related Standstill Period
As originally proposed, the amendments to Regulation 13D-G would
have restricted the use of Schedule 13G for all 13G eligible filers
(other than Exempt Investors) by limiting the aggregate amount of
securities that an investor could report on that Schedule to less than
20 percent. An investor would have been required to report on Schedule
13D within 10 calendar days after reaching the 20 percent threshold.
The proposed amendments would have subjected the investor to a
standstill period commencing at the time the threshold was reached and
continuing until the filing of the Schedule 13D.
The original proposals reflected the Commission's concern regarding
the need for prompt disclosure of sizeable blocks of securities because
of inherent control implications corresponding to such ownership
positions.34 In this regard, the Commission specifically requested
comment on the appropriateness of the 20 percent threshold level and
the appropriateness and length of the standstill period.35
[[Page 36526]]
Most of the commenters strongly opposed subjecting institutional
investors to the 20 percent threshold and the corresponding standstill
period. Although recognizing the Commission's concerns regarding the
need for prompt disclosure of sizeable blocks of securities, these
commenters questioned the usefulness of an expedited Schedule 13D
reporting obligation based solely upon reaching the 20 percent
threshold level. The commenters stressed that the increased disclosure
requirements of Schedule 13D are unwarranted where securities are
purchased by otherwise eligible institutions in the ordinary course of
business and that such a provision would impose too many costs with
little, if any, benefit to the market.
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\34\ As stated in the Proposing Release, the Commission does not
intend these proposed rules to create a presumption that beneficial
ownership of 20 percent or more of subject securities indicates
control or a control purpose.
\35\ Three commenters favored a threshold limiting the
availability of Schedule 13G to those filers whose securities
holdings fall below a certain level and also favored the proposed
standstill period. All three, however, believed that a 20 percent
level is too high. One believed that a 10 percent threshold is the
correct level because of the increasingly important role large
institutional investors play in contested voting situations. Another
suggested a 15 percent limit for non-institutional investors because
of the possibility of abuse by those investors and suggested that
such a requirement would not impose undue burdens on institutional
investors.
---------------------------------------------------------------------------
In particular, one commenter asserted that (1) where sizeable
blocks are held by institutional investors, such disclosure is already
fulfilled pursuant to the current requirement that a Schedule 13G
filing be made within 10 days after the end of the month where either
an excess of 10 percent ownership or an increase or decrease of more
than five percent ownership occurs, computed as of the last of the
month 36 and (2) institutions cross the 20 percent level most
often because the institutional investor holds convertible stock.
---------------------------------------------------------------------------
\36\ Rule 13d-1(b)(2) [17 CFR 240.13d-1(b)(2)].
---------------------------------------------------------------------------
Certain commenters strongly opposed the 20 percent threshold level
as it would apply to registered broker-dealers. One noted that a
marketmaker's function is to provide the issuer with an efficient
pricing mechanism and to provide purchasers and sellers with liquidity
thereby enabling them to dispose of or acquire securities.
The Commission is proposing today that the 20 percent limit would
apply only with respect to Passive Investors reporting on Schedule 13G
pursuant to new Rule 13d-1(b)(2). Consistent with the current
regulatory scheme, Qualified Institutional Investors would not be
subject to the 20 percent limitation. 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 preliminarily believes that Schedule 13G strikes an
appropriate balance between furnishing disclosure to the market and the
burdens placed on such institutions.
Upon reaching the 20 percent level, Passive Investors would be
required to report the acquisition within 10 calendar days on Schedule
13D, and would be subject to a standstill period during which time such
investor would not be permitted to vote or direct the voting of the
securities or acquire an additional beneficial ownership interest in
any equity securities of the issuer until the investor files the
Schedule 13D.37 Comment is requested on the appropriateness of
adopting a 20 percent limit on reporting on Schedule 13G and a
standstill period with respect to Passive Investors and with respect to
institutional investors who acquire securities other than in the
ordinary course of business that remain eligible to file on Schedule
13G as Passive Investors. Comment is also requested on whether a higher
or lower threshold should be adopted (e.g., 10 or 15 percent, or 25 or
30 percent.). Is a cap on ownership reported on Schedule 13G by Passive
Investors or the proposed standstill period necessary if the Commission
applies, as proposed, the current Schedule 13D amendment requirements
to Passive Investors? Would a lower threshold, for example 10 percent,
be more appropriate in the event the Commission instead decides to
permit Passive Investors to take advantage of the more liberal Schedule
13G amendment requirements?
---------------------------------------------------------------------------
\37\ As proposed, the acquisition that causes the reporting
person to hold 20 percent or more and therefore triggers the
Schedule 13D filing obligation, may also trigger an amendment
requirement for such person's Schedule 13G (e.g., an acquisition of
one percent or more of the class). The Schedule 13G amendment would
be required to be filed promptly upon such acquisition and the
Schedule 13D would be required to be filed within 10 days of the
acquisition. The reporting person may forego filing the amendment to
the Schedule 13G if the Schedule 13D is filed promptly.
---------------------------------------------------------------------------
E. Re-establishing Schedule 13G Eligibility
The Commission is proposing to amend Regulation 13D-G to allow
persons who have lost their eligibility to file on Schedule 13G to re-
establish their Schedule 13G-eligibility and file on Schedule
13G.38 Specifically, a Qualified Institutional Investor who has
lost its Schedule 13G eligibility because it is no longer a qualified
entity under Rule 13d-1(b)(1)(ii) or cannot certify that it acquired or
holds the securities in the ordinary course of business and not with
the purpose or effect of changing or influencing control would be
allowed to switch back to Schedule 13G pursuant to the Qualified
Institutional Investor provision 39 once it re-establishes its
status under Rule 13d-1(b)(1)(ii) or can again make the necessary
certifications. Similarly, a Passive Investor that has lost its
Schedule 13G-eligibility under proposed Rule 13d-1(b)(2) because it can
no longer certify that it does not have a disqualifying purpose or
effect or because it exceeded the 20 percent threshold, would be able
to switch back to Schedule 13G when it is once again able to make the
certification or when its beneficial ownership falls below 20 percent.
The Commission preliminarily believes that investors and the market
would be better informed if reporting persons were able to switch back
to Schedule 13G after re-establishing their eligibility, since the
filing of a Schedule 13D would be a clearer indicator of an investor
that currently has a disqualifying purpose or effect or an investor
that holds 20 percent or more of the class. Comment is requested on
whether the proposal would provide better information or whether it
would lead to abuse by filing persons.
---------------------------------------------------------------------------
\38\ Proposed Rule 13d-1(b)(7).
\39\ Rule 13d-1(b)(1).
---------------------------------------------------------------------------
F. Expansion of the Class of Qualified Institutional Investors
As reproposed, the use of the short-form Schedule 13G pursuant to
the Qualified Institutional Investor provisions of Rule 13d-1(b)(1)
would 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. Use of the 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 40 or, under the current
practice, a no-action position from the Division of Corporation Finance
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.
---------------------------------------------------------------------------
\40\ See Exchange Act Release No. 14692 (April 21, 1978) [43 FR
18484].
---------------------------------------------------------------------------
Since the Passive Investor provisions of proposed Rule 13d-1(b)(2)
would make Schedule 13G available to all investors that do not have a
disqualifying purpose or effect, including foreign investors, it is
unclear whether foreign institutions would still seek relief to file on
Schedule 13G under the Qualified Institutional
[[Page 36527]]
Investor provisions of Rule 13d-1(b)(1). The use of Schedule 13G
pursuant to the Passive Investor provisions would require the schedule
to be filed within 10 calendar days of the acquisition as opposed to
within 45 days after the calendar year in which the institution holds
more than five percent at year end under the Qualified Institutional
Investor provision, and could not be used to report beneficial
ownership of 20 percent or more. Similarly, a prompt amendment
requirement may make reliance on the Passive Investor provision less
useful for foreign institutions than the Qualified Institutional
Investor provision. Comment is requested as to whether the accelerated
filing and amendment requirement, and the 20 percent limit under
proposed Rule 13d-1(b)(2) would discourage foreign investors from using
that provision and cause those foreign institutional investors to
continue to seek relief to file pursuant to Rule 13d-1(b)(1).
The Commission continues to believe that a non-U.S. institution
seeking relief to file pursuant to Rule 13d-1(b)(1) should be subject
to a regulatory scheme in its country comparable to the U.S. regulatory
scheme for the particular category of institution and that such
institutions should undertake to grant the Commission access to
information that would otherwise be disclosed on Schedule 13D.41
Accordingly, no change to current practice is proposed. However,
comment is requested as to whether Rule 13d-1(b)(1) should be amended
expressly to allow foreign institutional investors that are the
functional equivalent of the domestic institutions enumerated in Rule
13d-1(b)(1)(ii) (A)-(G) to file on Schedule 13G pursuant to that
provision without having to obtain individual relief from the
Commission. In this regard, should the foreign institution be required
to certify on the Schedule 13G that it is subject to a regulatory
scheme comparable to the U.S. for the particular category of
institution? Additionally, should filing on Schedule 13G under either
provision only be available to non-U.S. persons who consent on the
Schedule 13G to furnish the Commission with information, at its
request, that would otherwise be disclosed in a Schedule 13D?
---------------------------------------------------------------------------
\41\ Under the Qualified Institutional Investor provision, the
initial Schedule 13G is filed based upon the amount beneficially
owned as of the last day of the calendar year unless the beneficial
ownership exceeded 10 percent of the outstanding securities at any
time during the year. Consequently, issuers and the market are not
informed during the year that such an investor holds more than five
percent of the issuer's securities. The Commission preliminarily
believes that since the Qualified Institutional Investor provision
do not require disclosure of such initial acquisitions or the
existence of such investors until the end of the year, these more
lenient filing requirements should be limited to regulated
institutions as enumerated in Rule 13d-1(b)(1)(ii).
---------------------------------------------------------------------------
Additionally, the Commission is proposing that control persons of
Qualified Institutional Investors be allowed to report indirect
beneficial ownership through the controlled entity on Schedule 13G so
long as the control person does 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.42 Control persons filing on Schedule 13G
pursuant to this provision would not be subject to the 20 percent
limitation as they would if they filed on Schedule 13G pursuant to the
Passive Investor provision.43 The Commission is also proposing to
make a conforming change under Section 16 of the Exchange Act.44
---------------------------------------------------------------------------
\42\ Proposed Rule 13d-1(b)(1)(ii)(G). This proposed amendment
codifies the no-action position set forth in Warren E. Buffet &
Berkshire Hathaway, Inc., (available December 5, 1986). Under the
original proposals, the no-action position would have continued to
be necessary because of the timing difference (45-day versus 10-day)
in the filing of the Schedule 13G by eligible institutions and
individuals. However, the current proposal would allow the
qualifying control person to file its Schedule 13G within the same
filing period as the qualifying institution it controls.
\43\ Proposed Rule 13d-1(b)(2).
\44\ The Commission proposes to amend Rule 16a-1(a)(1)(vii) to
include control persons of institutions in the list of persons that
are not deemed to be beneficial owners of securities held for the
benefit of third parties or in customer or fiduciary accounts in the
ordinary course of business as long as the shares are acquired
without the purpose or effect of changing or influencing control of
the issuer or engaging in any arrangement subject to Rule 13d-3(b).
This proposed amendment codifies the interpretive position set forth
in Edward C. Johnson 3d., (available August 20, 1991).
---------------------------------------------------------------------------
Finally, under the current requirements, only pension funds that
are subject to the Employee Retirement Income Security Act of 1974
(``ERISA'') are eligible to use Schedule 13G.45 The Commission
limited the category of pension funds eligible to use Schedule 13G to
pension funds subject to ERISA because such funds are subject to
uniform regulatory controls.46 The staff has granted no-action
relief to a state pension fund to use Schedule 13G based upon a showing
that the fund's fiduciaries were subject to similar regulatory
standards as those imposed by ERISA.47 The Commission
preliminarily believes that employee benefit plans maintained primarily
for the benefit of state or local government employees are now
generally subject to fiduciary obligations and standards for investment
that are substantially similar to those imposed by ERISA. Therefore,
the Commission proposes to amend Rule 13d-1(b)(1)(ii)(F) to allow
employee benefit plans maintained primarily for the benefit of
employees of a state or local government or instrumentality to report
beneficial ownership on Schedule 13G for securities acquired or held in
the ordinary course of business and not with the purpose or effect of
influencing the control of the issuer. Comment is requested as to
whether such proposal is necessary or appropriate. The Commission is
proposing to revise the current language in Rule 13d-1(b)(1)(ii)(F) to
clarify that employee benefit plans and pension funds must both be
subject to ERISA. The language will also be modified to eliminate a
redundancy. The Commission is proposing 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
also proposing to make a conforming change under Section 16 to amend
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.
Comment is requested on the appropriateness of conforming the list of
institutional investors in Rule 16a-1(a)(1) (i)-(viii) to reflect the
changes made to the list of Qualified Institutional Investors in Rule
13d-1(b)(1)(ii) (A)-(H).
---------------------------------------------------------------------------
\45\ See Rule 13d-1(b)(1)(ii)(F).
\46\ See Exchange Act Release No. 14692, Section II(A)(1)(b)
(April 21, 1978) [43 FR 18484].
\47\ See State of Wisconsin Investment Board and Wisconsin
Retirement System, (available December 8, 1992); see also, Ontario
Teachers' Pension Plan Board, (available May 6, 1992).
---------------------------------------------------------------------------
G. Related and Clarifying Amendments
The Commission is also proposing amendments to clarify the
beneficial ownership reporting requirements. Amendments are proposed to
eliminate the redundancies that currently exist in Regulation 13D-G
regarding the filing and dissemination requirements by setting forth
such requirements in one rule, proposed Rule 13d-7(b). Amendments are
also proposed to revise the dissemination requirements of Schedule 13G.
Since the Commission believes that a majority of investors will file
Schedule 13G in lieu of Schedule 13D as a result of the proposed
amendments to Regulation 13D-G, Schedule 13G will become the primary
reporting document for beneficial ownership. Therefore, amended Rule
13d-7(b) would require that the original and amendments to Schedules
13G be provided to each exchange where the
[[Page 36528]]
security is traded as is currently required for Schedules 13D. Comment
is requested as to whether it is necessary or appropriate to require
that copies of Schedules 13G be provided to each exchange since such
filings are required to be filed electronically on the Commission's
Electronic Data Gathering and Retrieval System and therefore available
in the electronic media, such as the Commission's World Wide Web site.
Additionally, Schedules 13G for exempt acquisitions would continue to
be sent only to the issuer at its principal executive offices and be
filed with the Commission. Amendments to Schedule 13G relating to
exempt acquisitions would no longer be required to be sent to an
exchange.
The Commission is also reproposing that a copy of a Schedule 13D,
Schedule 13G or amendment filed to report ownership of a class of
securities quoted on the National Association of Securities Dealers
Automated Quotation System be provided to the National Association of
Securities Dealers (``NASD'') to parallel the requirements for
exchange-traded securities.48 Comment is requested as to whether
it is necessary or appropriate to require that copies of the schedules
be provided to the NASD.
---------------------------------------------------------------------------
\48\ Proposed Rule 13d-7(b).
---------------------------------------------------------------------------
Amendments to Regulation 13D-G are proposed to clarify the number
of copies required to be filed. Additionally, Rule 13d-7 would be
revised to clarify that a Schedule 13D filed with respect to holdings
reported until then on Schedule 13G, and vice versa, does not require
an additional fee, if beneficial ownership had not fallen below five
percent.49 Finally, technical amendments to Schedules 13D and 13G
are being reproposed to conform the schedules to the proposed rules and
to amend the filing deadlines and the number of copies in the
instruction.
---------------------------------------------------------------------------
\49\ The Commission has proposed eliminating the filing fee
required for Schedules 13D and 13G. See Exchange Act Release No.
37220 (May 16, 1996) [61 FR 25601]. If such fee is eliminated, Rule
13d-7 will be revised accordingly.
---------------------------------------------------------------------------
H. Effects of Proposed Amendments to Regulation 13D-G
----------------------------------------------------------------------------------------------------------------
Proposed schedule
Issue Current schedule 13D 13D Current schedule 13G Proposed schedule 13G
----------------------------------------------------------------------------------------------------------------
Person Filing.... Any person acquiring No change.......... Qualified Institutional Qualified Institutional
more than 5% of an Investors--Eligible Investors--Expanded to
equity security. institutions acquiring include control persons
Rule 13d-1(a). more than 5% of an of qualified
equity security. Rule institutions and state
13d-1(b). and local employee
benefit plans.
Exempt Investors-- Exempt Investors--No
Persons holding more change.
than 5% of an equity
security who are not
subject to, or whose
acquisitions are exempt
from Section 13(d).
Rule 13d-1(c).
Passive Investors--Any
person holding more
than 5% but less than
20% of an equity
security and did not
acquire such securities
with a purpose or
effect of changing or
influencing control of
the issuer or in a
transaction having such
effect. Proposed Rule
13d-1(b)(2).
Initial Filing... Within 10 days after No change.......... Qualified Institutional Qualified Institutional
the acquisition. Investors--45 days Investors--No change.
Rule 13d-1(a). after calendar year in
which the person
becomes obligated to
file, Rule 13d-1(b)(1),
or within 10 days after
the end of the first
month in which such
person's beneficial
ownership exceeds 10%
of the class of equity
securities. Rule 13d-
1(b)(2).
Exempt Investors--45 Exempt Investors--No
days after calendar change. Passive
year in which the Investors--Within 10
person becomes days after the
obligated to file. Rule acquisition. Proposed
13d-1(c). Rule 13d-1(b)(2).
Amendment........ Filed promptly to No change.......... All Filers--45 days
reflect any after the end of the
material change calendar year to report
including a change any change in the
in investment information. Rule 13d-
intent. An 2(b).
acquisition or
disposition of
beneficial
ownership of
securities equal to
1% or more of the
class is deemed a
material change.
Rule 13d-2(a).
[[Page 36529]]
Qualified Institutional Qualified Institutional
Investors only--In Investors--No Change.
addition to the
requirement stated
above, within 10 days
after the end of the
first month in which
such person's
beneficial ownership
exceeds 10% of the
class of equity
securities, and
thereafter within 10
days of the end of any
month in which such
person's beneficial
ownership increases or
decreases more than 5%,
computed as of the end
of the month. Rule 13d-
1(b)(2).
Exempt Investors--No
change.
Passive Investors--Same
as requirement for
persons filing Schedule
13D. Proposed Rule 13d-
2(a).
Purpose of Disclose purpose of No change.......... Qualified Institutional Qualified Institutional
Acquisition. the transaction. Investors--Requires Investors--No change
Schedule 13D, Item certification that the except for a technical
4. securities were change to the
acquired in the certification.
ordinary course of
business, were not
acquired for the
purpose of and not have
the effect of changing
or influencing control
of the issuer, and were
not acquired in a
transaction having such
an effect. Schedule
13G, Item 10. Rule 13d-
1(b).
Exempt Investors--No Exempt Investors--No
certification required. change.
Passive Investors--Same
certification as
Qualified Institutional
Investors except that
acquisitions need not
occur in the ordinary
course of business.
Schedule 13G, proposed
Item 10(b). Proposed
Rule 13d-1(b)(2).
Initial Schedule Qualified Qualified Note: Ability to refile
13D following Institutional Institutional on Schedule 13G once
filing on Investors--Promptly Investors--No disqualification has
Schedule 13G. , but no later than change. Proposed lapsed clarified.
10 days after such Rules 13d-1(b)(4)
person ceases to be and (b)(6).
an eligible
institution or
determines that it
no longer holds
such securities in
the ordinary course
of business or not
with the purpose or
effect of changing
or influencing the
control of the
issuer. Rule 13d-
1(b)(3).
Exempt Investors-- Exempt Investors--
Within 10 days upon No change.
making an
acquisition subject
to, or not exempt
from Section 13(d).
Passive Investors--
Within 10 days of:
(1) acquiring or
holding the
securities with
the purpose or
effect of changing
or influencing
control of the
issuer or in a
transaction having
such effect.
Proposed Rule 13d-
1(b)(4), or.
[[Page 36530]]
(2) the person's
beneficial
ownership equals
or exceeds 20% of
the class of
equity securities.
Proposed Rule 13d-
1(b)(5).
Cooling-Off Qualified Qualified
Period. Institutional Institutional
Investors--10 day Investors--From
period after the the time the
filing of a person no longer
Schedule 13D holds the
because the person securities without
no longer holds the purpose or
such securities in effect of changing
the ordinary course or influencing
of business or not control of the
with the purpose or issuer until the
effect of changing tenth day from the
or influencing the date the Schedule
control of the 13D is filed.
issuer. Rule 13d- Proposed Rule 13d-
1(b)(3). 1(b) (4)(ii).
Passive Investors--
Same as Qualified
Institutional
Investors.
Proposed Rule 13d-
1(b) (4)(ii).
Standstill Period Passive Investors--
From the time the
person's
beneficial
ownership equals
or exceeds 20% of
the class of
equity securities
until the filing
of the Schedule
13D. Proposed Rule
13d-1(b)(5).
----------------------------------------------------------------------------------------------------------------
III. Initial Regulatory Flexibility Analysis
An Initial Regulatory Flexibility Analysis has been prepared in
accordance with 5 U.S.C. 603 concerning the proposed amendments to the
beneficial ownership rules and related Schedules 13D and 13G and the
proposed amendments to Rules 16a-1(a)(1)(vi) and (vii). 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 state and local government employee benefit
plans and certain control persons of Qualified Institutional Investors.
The analysis also indicates that there are no current federal rules
that duplicate, overlap or conflict with the rules and forms to be
amended.
As stated in the analysis, alternatives to the proposed amendments
were considered, including, among other things, changing or simplifying
the compliance or reporting requirements for small entities or
exempting small entities from all requirements to file the schedules
under Regulation 13D-G. As discussed in the analysis, there is no less
restrictive alternative to the proposed rule amendments that would
serve the purposes of the beneficial ownership provisions of the
Exchange Act.
Written comments are encouraged with respect to any aspect of the
analysis. Such comments will be considered in the preparation of the
Final Regulatory Flexibility Analysis if the proposed revisions are
adopted. A copy of the Initial Regulatory Flexibility Analysis 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.
IV. Paperwork Reduction Act
Certain provisions of Regulation 13D-G contain ``collection of
information'' requirements within the meaning of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501 et seq.), and the Commission has
submitted proposed revisions to Regulation 13D-G to the Office of
Management and Budget (``OMB'') for review in accordance with 44 U.S.C.
3507(d) and 5 C.F.R. Sec. 1320.11. The titles for the collections of
information are ``Schedule 13D'' and ``Schedule 13G''.
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. Regulation 13D-G currently requires
that most persons file a detailed disclosure statement on Schedule 13D
upon acquiring more than five percent of the subject securities.
Certain qualified institutions (Qualified Institutional Investors) and
persons who
[[Page 36531]]
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.50
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\50\ See fn. 13 supra for a comparison of the primary
differences between the disclosure required by Schedules 13D and
13G.
---------------------------------------------------------------------------
The Commission anticipates that the proposal to make Schedule 13G
available, in lieu of Schedule 13D, to all Passive Investors
beneficially owning less than 20 percent would reduce the existing
information collection requirements associated with Regulation 13D-G
and Schedules 13D and 13G. The proposed amendments will allow more
individuals and non-institutional investors to file the short-form
Schedule 13G. It is estimated that 803 Schedules 13D would be filed
each year if the proposals were adopted.51 Each Schedule 13D would
impose an estimated burden of 14.75 hours for a total annual burden of
11,844.25 hours.52 It is estimated that 9,065 Schedules 13G would
be filed each year if the proposals were adopted.53 Each Schedule
13G would impose an estimated burden of 10 hours for a total annual
burden of 90,650 hours.
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\51\ This estimated number of respondents is based upon the
number of Schedules 13D filed in fiscal year 1995 and assumes no
increase each year. This represents an estimated 76 percent
reduction from the 3,347 Schedules 13D filed in fiscal year 1995.
The estimated 76 percent reduction in Schedule 13D filings is based
upon the sample data provided by the Office of Economic Analysis.
\52\ 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.
\53\ This number of respondents is based upon the number of
Schedules 13G filed in fiscal year 1995 (6,521) plus the additional
2,544 respondents that are expected to file on Schedule 13G under
the proposed rules and assumes no increase each year.
---------------------------------------------------------------------------
Providing the information required by Schedules 13D and 13G is
mandatory under Sections 13(d) and 13(g) and Regulation 13D-G of the
Exchange Act. The information will not be kept confidential. Unless a
currently valid OMB control number is displayed on the Schedules 13D
and 13G, the Commission may not sponsor or conduct or require response
to an information collection.
Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits
comments to: (i) evaluate whether the proposed collection of
information is necessary for the proper performance of the functions of
the agency, including whether the information will have practical
utility; (ii) evaluate the accuracy of the Commission's estimate of the
burden of the proposed collection of information; (iii) enhance the
quality, utility, and clarity of the information to be collected; and,
(iv) minimize the burden of collection of information on those who are
to respond, including through the use of automated collection
techniques or other forms of information technology.
Persons desiring to submit comments on the collection of
information requirements should direct the comments to the Office of
Management and Budget, Attention: Desk Officer for the Securities and
Exchange Commission, Office of Information and Regulatory Affairs,
Washington, D.C. 20503, and should send a copy to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, with reference to File No. S7-16-96. The Office
of Management and Budget is required to make a decision concerning the
collection of information between 30 and 60 days after publication of
this release. Consequently, a comment to OMB is best assured of having
its full effect if OMB receives it within 30 days of publication.
V. Cost-Benefit Analysis
No specific data was provided in response to the Commission's
original request regarding the costs and benefits associated with
amending the filing requirements under Regulation 13D-G.54 It
appears that 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. Although it is difficult to determine reasonably
the number of small entities and the costs to small entities of
complying with the proposed amendments, the Commission believes that
the proposed amendments would not result in a substantial economic
impact to a significant number of small entities but rather should
result in a substantial savings to entities (both small and large) that
qualify to file Schedule 13G in lieu of Schedule 13D. The proposed
amendments would 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, 76 percent of Schedules 13D studied by that office did not
disclose a purpose or effect for changing or influencing control of the
issuer and, therefore, would benefit from the amendments proposed
today.55
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\54\ 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 passive institutional investors
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.
\55\ See Section I.B. supra.
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In response to comments in connection with the potential increased
costs that institutional investors could incur if subject to the 20
percent threshold level, the Commission is not reproposing the
amendment with respect to Qualified Institutional Investors.
The Commission again requests commenters to provide views and data
as to the costs and benefits associated with amending the filing
requirements for beneficial ownership statements.
VI. Request for Comment
Any interested persons wishing to submit written comments on the
proposals, to suggest additional changes, or to submit comments on
other matters that might have an impact on the proposals, are requested
to do so. In addition to the specific inquiries made throughout this
release, the Commission solicits comments on the usefulness of the
proposed revisions to the Regulation 13D-G reporting scheme and the
conforming changes under Section 16 to reporting persons, registrants,
and the marketplace at large.
The Commission also requests comment on whether the proposed rules,
if adopted, would have an adverse effect on competition or would impose
a burden on competition that is neither necessary nor appropriate in
furthering the purposes of the Exchange Act. Comments on this inquiry
will be considered by the Commission in complying with its
responsibilities under Section 23(a)(2) of the Exchange Act.56
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\56\ 15 U.S.C. 78w(a)(2).
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The Commission also encourages the submission of written comments
with respect to any aspect of the initial regulatory flexibility
analysis. Such written comments will be considered in the preparation
of the final regulatory flexibility analysis if the proposed rules are
adopted.
Persons wishing to submit written comments should file three copies
thereof with Jonathan G. Katz, Secretary,
[[Page 36532]]
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549. Comments may also be submitted electronically at the
following e-mail address: rule-comments@sec.gov. Comment letters should
refer to File No. S7-16-96; this file number should be included on the
subject line if e-mail is used. All comments received will be available
for public inspection and copying in the Commission's public reference
room at the same address. Electronically submitted comments will be
posted on the Commission's Internet web site (http://www.sec.gov).
VII. Statutory Basis and Text of Amendments
The amendments to Rules 13d-1, 13d-2 and 13d-7 and Schedules 13D
and 13G and Rule 16a-1 are being proposed 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 Proposed Amendments
In accordance with the foregoing, Title 17, Chapter II of the Code
of Federal Regulations is proposed to be 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, 77eee, 77ggg,
77nnn, 77sss, 77ttt, 78c, 78d, 78i, 78j, 78l, 78m, 78n, 78o, 78p,
78q, 78s, 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)(F) and
(G), and paragraphs (b)(2), (b)(3), (b)(4), and (c) and to add
paragraphs (b)(5), (b)(6) and (b)(7) 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 (d) of this section, is directly or indirectly
the beneficial owner of more than five percent of such class shall,
within 10 days after such 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, within 45 days
after the end of the calendar year in which such person became so
obligated, a short-form statement on Schedule 13G (Sec. 240.13d-102):
Provided, That it shall not be necessary to file a Schedule 13G unless
the percentage of the class of equity security specified in paragraph
(d) of this section beneficially owned as of the end of the calendar
year is more than five percent: And provided further, That:
* * * * *
(ii) * * *
(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'') which 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 (F), does
not exceed one percent of the securities of the subject class;
* * * * *
(2) 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 such
person:
(i) Has not acquired such 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 such
purpose or effect, including any transaction subject to Sec. 240.13d-
3(b);
(ii) Is not a person reporting pursuant to paragraph (b)(1) of this
section; and
(iii) Is not directly or indirectly the beneficial owner of 20
percent or more of such class.
(3) Any person relying on Sec. 240.13d-1(b)(1) or Sec. 240.13d-2(b)
shall, in addition to filing any statements thereunder, file a
statement on Schedule 13G (Sec. 240.13d-101), or amendment thereto,
within 10 days after the end of the first month in which such person's
direct or indirect beneficial ownership exceeds 10 percent of a class
of equity securities specified in Sec. 240.13d-1(d), computed as of the
last day of the month, and thereafter within 10 days after the end of
any month in which such person's beneficial ownership of securities of
such class, computed as of the last day of the month, increases or
decreases by more than five percent of such 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 (b)(3) unless the person thereafter
becomes the beneficial owner of more than 10 percent of the class,
computed as of the last day of the month.
(4)(i) Notwithstanding paragraphs (b)(1), (b)(2) and (b)(3) 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)(1), (b)(2) or (b)(3) of this section, or is required
to report such 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 such requirements for so long as,
such person:
(A) Has acquired or holds such 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 such purpose or effect,
including any transaction subject to Sec. 240.13d-3(b); and
(B) Is at that time the beneficial owner of more than five percent
of a class of equity securities described in Sec. 240.13d-1(d).
(ii) From the time such person has acquired or holds such
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 such purpose or effect until the expiration of the
tenth day from the date of the filing of a Schedule 13D (Sec. 240.13d-
101) pursuant to this section, such person shall not:
(A) Vote or direct the voting of the securities described therein;
or
(B) Acquire an additional beneficial ownership interest in any
equity securities of the issuer of such securities, nor of any person
controlling such issuer.
(5) Notwithstanding paragraph (b)(2) of this section and
Sec. 240.13d-2(b),
[[Page 36533]]
persons reporting on Schedule 13G (Sec. 240.13d-102) pursuant to
paragraph (b)(2) of this section shall immediately become subject to
Secs. 240.13d-1(a) and 240.13d-2(a) and shall remain subject to such
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, such person's
beneficial ownership equals or exceeds 20 percent of the class of
equity securities. Until the filing of a statement on Schedule 13D
pursuant to this paragraph, such 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 such securities, nor of any person
controlling such issuer.
(6)(i) Any person who has reported an acquisition of securities in
a statement on Schedule 13G (Sec. 240.13d-102) pursuant to paragraph
(b)(1) or (b)(3) of this section and thereafter ceases to be a person
specified in paragraph (b)(1)(ii) of this section shall immediately
become subject to Sec. 240.13d-1(a) or Sec. 240.13d-1(b)(2) (if such
person satisfies the requirements specified in Sec. 240.13d-1(b)(2)),
and Secs. 240.13d-2 (a) or (b) and shall remain subject to such
requirements for so long as, and shall file, within 10 days thereafter,
a statement on Schedule 13D (Sec. 240.13d-101) or amendment to Schedule
13G, as applicable, if such person is a beneficial owner at that time
of more than five percent of the class of equity securities.
(ii) Any person that has reported beneficial ownership on Schedule
13G (Sec. 240.13d-102) pursuant to Sec. 240.13d-1(b)(1) shall file an
amendment on Schedule 13G within 10 days of the date that such person
determines that it no longer has acquired or holds such securities in
the ordinary course of business, Provided That such person may continue
to file on Schedule 13G pursuant to Sec. 240.13d-1(b)(2).
(7) Any person who has filed a Schedule 13D (Sec. 240.13d-101)
pursuant to paragraph (b)(4), (b)(5) or (b)(6) of this section may
again report its beneficial ownership on Schedule 13G (Sec. 240.13d-
102) pursuant to paragraphs (b)(1), (b)(2) or (b)(3) of this section
provided such person qualifies thereunder, as applicable, by filing a
Schedule 13G (Sec. 240.13d-102) once the person determines that the
provisions of paragraph (b)(4), (b)(5) or (b)(6) of this section no
longer apply.
(c) 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 (d) 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 such
beneficial ownership was acquired prior to December 22, 1970, or
because such 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 such a statement, shall file with the Commission,
within 45 days after the end of the calendar year in which such person
became obligated to report under this paragraph (c), a statement
containing the information required by Schedule 13G (Sec. 240.13d-102).
* * * * *
3. By amending Sec. 240.13d-2 by revising paragraphs (a), (b), and
the note following paragraph (c) 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) or the
Schedule 13G (Sec. 240.13d-102) filed pursuant to Sec. 240.13d-1(b)(2),
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 such statement shall promptly file or cause to be
filed with the Commission an amendment disclosing such change. An
acquisition or disposition of beneficial ownership of securities in an
amount equal to one percent or more of the class of securities shall be
deemed ``material'' for purposes of this section; acquisitions or
dispositions of less than such 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)(1) continues to meet the requirements set forth
therein, any person who has filed a Schedule 13G pursuant to
Sec. 240.13d-1(b)(1) or Sec. 240.13d-1(c) shall amend such statement
within forty-five 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; Provided, however,
That such amendment need not be filed with respect to a change in the
percent of class outstanding previously reported if such 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) * * *
Note to Sec. 240.13d-2: For persons filing a short-form
statement pursuant to Rule 13d-1(b) (1) or (2), see also Rules 13d-
1(b) (3), (4), (5), and (6).
4. By amending Sec. 240.13d-7 by revising the section heading,
designating the current text as paragraph (a), revising the last
sentence of newly designated paragraph (a) and adding paragraph (b) to
read as follows:
Sec. 240.13d-7 Fees for filing Schedules 13D or 13G; Number of Copies;
Dissemination.
(a) * * * No fees shall be required with respect to the filing of
any amended Schedule 13D (Sec. 240.13d-101) or amended Schedule 13G
(Sec. 240.13d-102), and no fees shall be required with respect to an
initial Schedule 13D or initial Schedule 13G if the filing person
previously has filed a Schedule 13D or Schedule 13G reporting
beneficial ownership of more than five percent of such class of equity
securities and has not subsequently filed an amendment reporting
beneficial ownership of five percent or less of such class; Provided,
however, That once an amendment has been filed reflecting beneficial
ownership of five percent or less of such class, an additional fee of
$100 shall be paid with the next filing of that person that reflects
ownership of more than five percent.
(b) Schedules filed with the Commission pursuant to Secs. 240.13d-1
and 240.13d-2 in paper format shall include a signed original and five
copies of the schedule, including all exhibits. 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, and (except with respect to persons
filing pursuant to Sec. 240.13d-1(c)) to each national securities
exchange or the securities association that operates the automated
inter-dealer quotation system where the security is traded or
authorized to be quoted.
5. By amending Sec. 240.13d-101 by revising the language preceding
the first box on the cover page, and revising the note on the cover
page to read as follows:
[[Page 36534]]
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(b)(4), 240.13d-
1(b)(5) or 240.13d-1(b)(6), 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.
* * * * *
6. By amending Sec. 240.13d-102 by revising the section heading,
adding a line for the date of the reportable event following the line
for CUSIP Number, revising Instruction A, revising Items 3, 4, 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) and (c) and amendments
thereto filed pursuant to Sec. 240.13d-1(b)(3) or Sec. 240.13d-2.
* * * * *
(Date of Event Which Requires Filing of this Statement)
* * * * *
Instructions. A. Statements filed pursuant to Sec. 240.13d-1(b)(1)
containing the information required by this schedule shall be filed not
later than February 14 following the calendar year in which the person
became obligated to report or within the time specified in
Sec. 240.13d-1(b)(3), if applicable. Statements filed pursuant to
Sec. 240.13d-1(b)(2) shall be filed not later than 10 days after the
event requiring the filing.
* * * * *
Item 3. If this statement is filed pursuant to Secs. 240.13d-
1(b)(1) or 240.13d-2(b), check whether the person filing is a:
(a) [ ] Broker or dealer registered under section 15 of the Act.
(b) [ ] Bank as defined in section 3(a)(6) of the Act.
(c) [ ] Insurance company as defined in section 3(a)(19) of the
Act.
(d) [ ] Investment company registered under section 8 of the
Investment Company Act of 1940.
(e) [ ] Investment adviser registered under section 203 of the
Investment Advisers Act of 1940.
(f) [ ] 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'') which 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) [ ] Parent holding company or control person, in accordance
with Sec. 240.13d-1(b)(1)(ii)(G).
If this statement is filed pursuant to Sec. 240.13d-1(b)(2), 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 such 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 10. Certification.
(a) The following certification shall be included if the statement
is filed pursuant to Sec. 240.13d-1(b)(1):
By signing below I certify that, to the best of my knowledge and
belief, the securities referred to above were acquired and held in the
ordinary course of business and 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 or held
in connection with or as a participant in any transaction having such
purpose or effect.
(b) The following certification shall be included if the statement
is filed pursuant to Sec. 240.13d-1(b)(2):
By signing below I certify that, to the best of my knowledge and
belief, the securities referred to above 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 or
held in connection with or as a participant in any transaction having
such 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.
* * * * *
2. By amending Sec. 240.16a-1 to revise paragraphs (a)(1)(vi) and
(vii) to read as follows:
Sec. 240.16a-1 Definition of terms.
* * * * *
(a) * * *
(1) * * *
(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. (``Employee Retirement Income Security Act'') which is
subject to the provisions of the Employee Retirement Income Security
Act, or any such plan that is not subject to the Employee Retirement
Income Security Act 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 its subsidiaries or affiliates that are not
persons specified in Sec. 240.16a-1(a)(1) (i) through (vi), does not
exceed one percent of the subject class; and
* * * * *
Dated: July 3, 1996.
By the Commission.
Jonathan G. Katz,
Secretary.
[FR Doc. 96-17579 Filed 7-10-96; 8:45 am]
BILLING CODE 8010-01-P
