Other Issues

Regulation 13G was adopted to ease the beneficial ownership requirements for “passive investors.” In lieu of filing a Schedule 13D, a passive investor whose beneficial ownership exceeds five percent (5%) of any registered security may file a Schedule 13G. A “passive investor” is defined as any person who can certify that they did not purchase or do not hold the securities for the purpose of changing or influencing control over the issuer and hold no more than twenty percent (20%) of the issuer’s securities.

Passive investors choosing to file a Schedule 13G must do so within ten (10) calendar days after crossing the five (5%) percent threshold. Unlike Schedule 13D which requires an amendment to be filed upon every one (1%) percent change in ownership, Schedule 13G requires amendments to be filed promptly after more than five (5%) percent changes in position. Passive investors must also amend their Schedule 13G within forty-five (45) days after the end of the calendar year to report any changes in the information previously reported.

A hedge fund manager who is registered as an investment adviser with either the U.S. Securities and Exchange Commission or under the laws of any state is a “Qualified Institutional Investor.” As a Qualified Institutional Investor, the manager may file Schedule 13G within forty-five (45) days after the end of the calendar year in which the fund’s beneficial ownership exceeded five percent (5%).