A Comprehensive Guide to Schedule 13D: Mastering Beneficial Ownership Reporting

Learn everything you need to know about Schedule 13D reporting, including the significance, requirements, and real-world applications. Stay informed and make better investment decisions.

What is Schedule 13D?

Schedule 13D is a form that must be filed with the U.S. Securities and Exchange Commission (SEC) when a person or group acquires more than 5% of a voting class of a company’s equity shares. Schedule 13D must be filed within 10 days of the filer reaching a 5% stake. This document is also known as the ‘beneficial ownership report.’

Key Takeaways

  • When a person or group acquires 5% or more of a company’s voting shares, they must report it to the SEC.
  • Schedule 13D requires disclosure of the purpose behind the transaction, such as a takeover or merger.
  • Any beneficial owner’s holdings changing by 1% or more necessitate an amended Schedule 13D.

Understanding Schedule 13D

Investors may decide to buy a large number of shares in a publicly-held company for a variety of reasons. They could be activist investors attempting a hostile takeover, institutional investors who believe the stock is undervalued, or a dissident shareholder contemplating a proxy contest with the goal of replacing management.

When a person or group of persons acquire a significant ownership stake in a company—characterized as more than 5% of a voting class of its publicly traded securities—the SEC requires that they disclose the purchase on a Schedule 13D form. In some cases, they may use a simpler form called Schedule 13G.

Once the disclosure has been filed with the SEC, the public company and the exchanges on which the company trades are notified of the new beneficial owner. Schedule 13D is intended to provide transparency to the public regarding who these shareholders are and why they have taken a significant stake in the company. The form signifies to the public that a change of control, such as a hostile takeover or proxy fight, might be imminent so that current shareholders in the company can make informed investing and voting decisions.

The obligation to file Schedule 13D lies with the new beneficial owner since the target company might not be aware of the person or group behind the transaction. The beneficial owner must file Schedule 13D within 10 days following the purchase of the shares.

Requirements for Schedule 13D

Schedule 13D requires the beneficial owner to provide relevant information about several items, including the following:

Item 1: Security and Issuer

This section asks about the type of securities purchased and the name and address of the company that issued them.

Item 2: Identity and Background

In this section, the buyers identify themselves, including their type of business, citizenship, and any criminal convictions or involvement in civil suits within the past five years.

Item 3: Source and Amount of Funds or Other Considerations

This section notes where the money is coming from, including whether any of it was borrowed.

Item 4: Purpose of Transaction

This section of Schedule 13D alerts investors to any change of control that might be looming. Among other disclosures, beneficial owners must indicate whether they have plans involving a merger, reorganization, or liquidation of the issuer or any of its subsidiaries.

Item 5: Interest in Securities of the Issuer

Here the beneficial owner lists the number of shares being purchased and the percentage of the company’s outstanding shares that this purchase represents.

Item 6: Contracts, Arrangements, Understandings, or Relationships with Respect to Securities of the Issuer

The beneficial owner should describe any agreement or relationship they have with any person regarding the target company’s securities. For example, that might involve voting rights, finder’s fees, joint ventures, or loans or option arrangements.

Item 7: Material to be Filed as Exhibits

These include copies of any written agreements the beneficial owner has entered into with regard to the securities.

Special Considerations: Disclosure of Material Changes

If there are any material changes to the information filed in Schedule 13D, the beneficial owners must amend their Schedule 13D within two days. A material change includes any increase or decrease of at least 1% in the percentage of the class of securities held by the beneficial owner.

Most Schedule 13D filings are available for viewing via the SEC’s EDGAR database. The database presents Form 13D as ‘SC 13D—General statement of acquisition of beneficial ownership.’ Any amended form is denoted as SC 13D/A.

Real-World Example of Schedule 13D

The media conglomerate IAC/InterActiveCorp (IAC) purchased a significant amount of equity shares in MGM Resorts International (MGM). The resulting 13D was filed on August 20, 2020, with the SEC.

Below is a portion of the 13D filing for MGM:

  • IAC/InterActiveCorp is named as the reporting person (section 1).
  • The number of shares purchased was 59,033,902 (section 7).
  • The purchase represented a 12% ownership in MGM, based on the outstanding shares at the time (section 13).

Example Screenshots

Title Page for the 13D Filing:

Details from the 13D Filing:


  1. U.S. Securities and Exchange Commission. “Schedule 13D”.
  2. SEC Edgar Filing. “MGM Resorts International”.

Get ready to put your knowledge to the test with this intriguing quiz!

--- primaryColor: 'rgb(121, 82, 179)' secondaryColor: '#DDDDDD' textColor: black shuffle_questions: true --- ## What is Schedule 13D primarily used for? - [ ] Reporting quarterly earnings - [x] Disclosing acquisition of more than 5% equity in a company - [ ] Filing taxes - [ ] Auditing financial statements ## Schedule 13D must be filed with which regulatory body? - [ ] Federal Reserve - [x] Securities and Exchange Commission (SEC) - [ ] Department of the Treasury - [ ] Internal Revenue Service (IRS) ## Within how many days must Schedule 13D be filed after acquiring more than 5% in a company's equity? - [ ] 30 calendar days - [ ] 15 calendar days - [ ] 20 business days - [x] 10 calendar days ## What key information must be disclosed in Schedule 13D? - [x] Identity and background of the filer - [ ] Quarterly revenue reports - [ ] Marketing strategies - [ ] Annual interest expenses ## Who is typically required to file Schedule 13D? - [ ] Auditors - [x] Beneficial ownership holders acquiring more than 5% of a company's voting shares - [ ] Employees - [ ] Customers ## Which section of Schedule 13D contains information about the purpose of the transaction? - [ ] Executive Summary - [ ] Financial Statements - [x] Item 4 - [ ] Background Data ## The Schedule 13D must be amended in which situation? - [x] When there are material changes in the information provided - [ ] When the market value of shares fluctuate - [ ] When the company declares a dividend - [ ] When quarterly earnings are reported ## What is the primary difference between Schedule 13D and Schedule 13G? - [ ] Schedule 13D is for companies, and Schedule 13G is for individuals - [ ] Schedule 13D is filed yearly, and Schedule 13G is filed quarterly - [ ] Schedule 13D relates to bonds, and Schedule 13G relates to stocks - [x] Schedule 13D is for active investors, while Schedule 13G is for passive investors ## Which scenario requires filing a Schedule 13D? - [ ] John purchases $1,000 worth of stocks from various companies - [x] Mary acquires more than 5% of a company’s equity with the intent to influence control - [ ] Barry sells 3% of his holdings in a public company - [ ] Sandra's firm declares quarterly dividends ## Failure to file Schedule 13D in time can result in: - [ ] Losses due to market volatility - [ ] Benefits in taxation - [ ] Improved shareholder relations - [x] Penalties from the SEC