Schedule 13D Explained: Filing Requirements, Process, and 2025 Example at $0 Cost

What Is Schedule 13D?

Schedule 13D is a critical disclosure form required by the U.S. Securities and Exchange Commission (SEC) whenever an individual or group acquires more than 5% of a voting class of a company's shares. This filing must be submitted within 10 days of crossing the 5% ownership threshold and is often referred to as a "beneficial ownership report."

Key Highlights

• Acquisition of 5% or more voting shares triggers Schedule 13D filing.
• The form reveals the purpose behind the acquisition, such as potential takeovers or mergers.
• Any significant changes, defined as 1% or more in holdings, require prompt amendments to the filing.

Why Schedule 13D Matters

Investors might purchase large stakes in public companies for various reasons—activist investors aiming for control, institutional investors spotting undervalued stocks, or shareholders preparing for proxy battles. Schedule 13D ensures transparency by notifying the public and the company about substantial ownership changes that could signal shifts in control or strategy.

This disclosure helps current shareholders make informed decisions about their investments and voting rights, especially when a potential takeover or reorganization is underway.

Filing Requirements for Schedule 13D

The beneficial owner must provide detailed information, including:

• Item 1: Security type and issuer details.
• Item 2: Identity and background of the filer, including business type, citizenship, and any legal history.
• Item 3: Source and amount of funds used for the purchase, including borrowed money.
• Item 4: Purpose of the transaction, such as mergers, reorganizations, or liquidation plans.
• Item 5: Number and percentage of shares owned post-acquisition.
• Item 6: Any contracts or relationships related to the securities, like voting agreements or joint ventures.
• Item 7: Exhibits including written agreements relevant to the securities.

Updating Schedule 13D for Material Changes

Beneficial owners must promptly amend their Schedule 13D within two business days if there is a material change, defined as at least a 1% increase or decrease in ownership. These updates maintain ongoing transparency for investors and regulators.

All Schedule 13D filings are publicly accessible through the SEC's EDGAR database, where original filings appear as "SC 13D" and amendments as "SC 13D/A."

2024 Real-World Example: IAC's Acquisition in MGM Resorts

In a notable 2020 filing, media giant IAC/InterActiveCorp disclosed acquiring a 12% stake in MGM Resorts International by purchasing over 59 million shares. This Schedule 13D filing highlighted IAC's significant ownership and intentions, providing investors with critical insights into potential strategic moves.

This example underscores the importance of Schedule 13D in revealing key ownership changes that could impact company control and shareholder value.

Visuals from the MGM Resorts 13D Filing

MGM Resorts International 13D Filing Example. Source: Investopedia

Detailed 13D Filing from MGM Resorts International. Source: Investopedia

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