SEC Staff Issues New CFIs Concerning Schedule 13G Eligibility

On Sept. 2, the Staff of the SEC’s Division of Corporation Finance issued three new Corporate Finance Interpretations (CFIs) addressing the extent to which specified communications undertaken by a shareholder might affect the shareholder’s eligibility to continue reporting on Schedule 13G in lieu of Schedule 13D. The background and content of the new CFIs are summarized below.

Background

Each new CFI is phrased in terms of the ability of a shareholder that reports its beneficial ownership on Schedule 13G “in reliance on Rule 13d-1(b) or Rule 13d-1(c)” to continue reporting on Schedule 13G after engaging in certain communications with an issuer or a third party. Each of those rules requires the shareholder reporting on Schedule 13G to certify that it does not hold its securities “for the purpose or with the effect of changing or influencing the control of the issuer.” ¹