The cover pages of both Form 10-K and Form 10-Q have this seemingly random disclosure:

 Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

At first glance the reason for this disclosure is somewhat mysterious.  While it might be relevant to investors if the company has issued or repurchased shares after period-end, the most important purpose of this disclosure is actually for reporting major shareholdings.

Regulation 13D-G essentially requires owners of 5% or more of a class of common equity securities registered under Section 12 of the 1934 Act to make their ownership public.  (You can read more about the details of this reporting process here.)  The cover page disclosure about number of shares outstanding is used to determine if a shareholder owns 5% or more of the company’s common shares.

Generally, the Rules require that this ownership be reported on a Form 13D, but if the person  reporting does not have the purpose of “changing or influencing control of the issuer” then they can report on the shorter Form 13G.

On February 10, 2022, the SEC proposed changes to Regulation 13D-G.  The deadlines for Forms 13D and 13G have not been changed in decades.  In the Press Release announcing this proposal, Chair Gary Gensler stated:

“These amendments would update our reporting requirements for modern markets, reduce information asymmetries, and address the timeliness of Schedule 13D and 13G filings.  Investors currently can withhold market moving information from other shareholders for 10 days after crossing the 5 percent threshold before filing a Schedule 13D, which creates an information asymmetry between these investors and other shareholders.  The filing of Schedule 13D can have a material impact on a company’s share price, so it is important that shareholders get that information sooner.”

As you can read in this Fact Sheet, the Proposed Rule would:

• Accelerate the filing deadlines for Schedules 13D and 13G,
• Include certain derivative instruments in this reporting process,
• Clarify when two or more persons comprise a “group” subject to 13D and 13G reporting, and
• Require Schedules 13D and 13G to use a “structured, machine-readable data language.”

 This blog post from Nelson Mullins includes more discussion.

As always, your thoughts and comments are welcom