Media Mentions
Section 13 Beneficial Ownership: Schulte partners Ele Klein and Adriana Schwartz quoted in Hedge Fund Law Report
January 10, 2024
Schulte Roth & Zabel partners Ele Klein and Adriana Schwartz discussed the recent SEC rules addressing derivatives and group formation with Hedge Fund Law Report's Vincent Pitaro for his article titled, "Shorter Filing Deadlines for Schedules 13D and 13G and Other Beneficial Ownership Rule Changes." The industry interpreted the SEC proposals on “group” formation to lower the standard for forming a group in an unworkable manner, Klein explained. “Thankfully, the SEC made clear that was not their intention, and it instead offered guidance on group formation, which, for the most part, was consistent with past guidance and case law.” He added, "The changes effected by the Rules are mainly limited to shortening the deadlines for Schedule 13D and 13G filings."
Adriana stated that “[a]ll managers – but particularly activists – will need to adjust their timelines to be ready to make their positions public sooner and make decisions as to whether the desired position can be obtained in the time allotted, so the campaign will be viable from an economic perspective.” She continued, “Those managers will be making initial filings and amendments sooner and more frequently, adding to an ever growing list of compliance items and filing requirements on their plate.”
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Alerts
On April 24, 2024, the Internal Revenue Service (“IRS”) released final regulations (TD 9992) (“Final Regulations”) addressing the determination of whether a real estate investment trust (“REIT”) is “domestically controlled.” The Final Regulations finalize proposed regulations (REG-100442-22) (“Proposed Regulations”) under Section 897 of the Internal Revenue Code published on Dec. 29, 2022.[1]
Alerts
On March 1, 2024, New York Governor Kathy Hochul signed into law an amended version of the New York LLC Transparency Act (“NYLTA”),[1] requiring certain limited liability companies (“LLCs”) formed or authorized to do business in New York (each, a “NY Reporting Company”) to file a beneficial ownership information (“BOI”) report with the NY Department of State (“NY DOS”). Each NY Reporting Company will be required to disclose on its BOI report identifying information pertaining to each individual who directly or indirectly exercises substantial control or owns or controls 25 percent or more of the ownership interests of a NY Reporting Company (each, a “Beneficial Owner”) and the individuals involved in the NY Reporting Company’s formation or registration to do business in New York (each, an “Applicant”). Information reported to NY DOS will be maintained in a private database not accessible to the public. The NYLTA goes into effect on Jan. 1, 2026 and requires the NY DOS to promulgate regulations implementing the legislation.