What Is SEC Form 4: Statement of Changes in Beneficial Ownership?
SEC Form 4: Statement of Changes in Beneficial Ownership is a document that must be filed with the Securities and Exchange Commission (SEC) whenever there is a material change in the holdings of company insiders. Insiders consist of directors and officers of the company, as well as any shareholders, owning 10% or more of the company's outstanding stock. The forms ask about the reporting person's relationship to the company and about purchases and sales of such equity shares.
The filing of Form 4 relates to Sections 16(a) and 23(a) of the Securities Exchange Act of 1934, as well as Sections 30(h) and 38 of the Investment Company Act of 1940. Disclosure of information required on Form 4 is mandatory and becomes public record upon filing.
Key Takeaways
Form 4 must be filed with the Securities and Exchange Commission whenever there is a material change in the holdings of company insiders.
If a party fails to disclose required information on a Form 4, civil or criminal actions could result.
It must be filed within two business days starting from the end of the day the material transaction occurred.
Understanding SEC Form 4: Statement of Changes in Beneficial Ownership
There are multiple SEC forms that are associated with the ownership of stocks or securities for publicly-traded companies. SEC Form 4 is one of three forms that is usually required by the SEC.
Form 3
Individuals file Form 3 when they first acquire a stock and are registering the securities for the first time. The form must be filed within 10 days of the individual becoming an officer, director, or beneficial owner at the company.
Form 4
Form 4 is required to be filed by a company or the individual at the company when there is a change in the holdings of company insiders. Form 4 must be filed with the SEC within two days of the transaction. Form 4 is a two-page document, which covers any buy-and-sell orders, as well as the exercise of company stock options.
Options are contracts that give the holder the right, but not the obligation to buy or sell a stock at a certain price, and by a specific date. Options are often awarded to executives and directors of companies as part of the employee incentive plan. Typically, the options can be cashed out or redeemed after a predetermined holding period has expired.
Form 5
Form 5 is filed if a person conducted a trade of the company's stock but failed to report it via Form 4. Form 5 allows the individual 45 days following the close of the company's fiscal year.
The SEC is able to use the information in SEC Form 4 when referring a case to other governmental authorities and self-regulatory organizations (SROs). If a party fails to disclose the required information on Form 4, civil or criminal actions could result.
Forms Related to SECForm 4
Several other forms are critical to maintaining transparency and recording the actions of public company executives, officers, and directors. These include the company's annual financial report, which is filed via a 10-K and the quarterly financial report filed via a 10-Q.
If a company is issuing stock for the first time, they must file Form S-1, and if any amendments must be made, they file Form S-1A. The 8-K is filed when there are unscheduled material events or corporate changes. Schedule 13D informs the SEC when an entity acquires more than 5% of the stock of a public company.
The SEC has the capacity to use information disclosed on Form 4 in investigations or litigation involving federal securities laws, in addition to other civil, criminal, or regulatory statutes or provisions.
How to File SEC Form 4: Statement of Changes in Beneficial Ownership
In general, a party must file Form 4 electronically via the Commission’s Electronic Data Gathering Analysis and Retrieval System (EDGAR). Exceptions can occur during hardship. It is mandatory within two business days starting from the end of the day the material transaction occurred.
Here is a link to a downloadable SEC Form 4: Statement of Changes in Beneficial Ownership.
Real-World Example of SEC Form 4
In February 2020, Elon Musk, the Chief Executive Officer (CEO) of the publicly-traded company Tesla Inc. (TSLA), filed SEC Form 4 as an individual. Below is a copy of the Form 4 as well as the details of the transaction, which was obtained via the SEC's EDGAR system.
Section 1 contains the reporting person's name, which was Elon Musk, and the address for the company.
Section 2 has the company name of Tesla Inc.
Section 3 contains the transaction date of February 14, 2020.
Table 1
Section 1 contains the type of security, which was common stock.
Section 4 contains the number of shares, the action taken (whether the shares were acquired or disposed of), and the price at which the shares were bought or sold.
The SEC Form 4 shows that Elon Musk purchased 13,037 shares at a price of $767, which left Mr. Musk with a total number of shares owned of 34,098,597 following the purchase (section 5).
What Is SEC Form 4: Statement of Changes in Beneficial Ownership? SEC Form 4: Statement of Changes in Beneficial Ownership is a document that must be filed with the Securities and Exchange Commission (SEC) whenever there is a material change in the holdings of company insiders.
Form 4: Statement of Changes in Beneficial Ownership is a two-page document in which corporate insiders must list any recent purchases or sales of company stock they have made, and the exercise of any company options.
Most of the information on Form 4 is self-explanatory. The form includes spaces for the reporting person's name and address, the company name and ticker, the date of the transaction, and the relationship of the reporting person to the company. The most important part of Form 4 involves specific transaction information.
Change of Beneficial Ownership means, with respect to any Representative-ship that is operated as a Business Entity, the sale, transfer or acquisition of any ownership interest in the Business Entity by any person or entity or group of persons or entities who are not listed on the original Business Entity Registration ...
What's a Form 4? In most cases, when an insider executes a transaction, he or she must file a Form 4. With this form filing, the public is made aware of the insider's various transactions in company securities, including the amount purchased or sold and the price per share.
The SEC requires that Form S-4 contain information regarding the terms of the transaction, risk factors, ratios, pro-forma financial information, and material contracts with the company being acquired. Companies seeking a hostile takeover of another company must file form S-4 in the interests of public disclosure.
Form 4 must be filed with the Securities and Exchange Commission whenever there is a material change in the holdings of company insiders. If a party fails to disclose required information on a Form 4, civil or criminal actions could result.
Form 4 filings include information about the insider, their relationship to the company and its securities, the type of transaction that occurred, and the amount and type of securities involved. A failure to file Form 4 timely must be reported in proxy statements or 10-Ks and can lead to fines.
A beneficial owner is someone who owns at least part of a property or other asset, even if its legal title is owned by someone else. That person can also vote on or otherwise influence decisions regarding transactions involving that asset or property. An example is a corporate shareholder.
Beneficial ownership is determined under both a control prong and an ownership prong. Under the control prong, the beneficial owner is a single individual with significant responsibility to control, manage or direct a legal entity customer.
Are some companies exempt from the reporting requirement? Yes, 23 types of entities are exempt from the beneficial ownership information reporting requirements. These entities include publicly traded companies meeting specified requirements, many nonprofits, and certain large operating companies.
The ATF Form 4 must be filled out and submitted if you're purchasing a silencer or other NFA item. You fill out the Form 4 and pay the tax stamp fee when you pay for your NFA item — but you can't take that item with you, not yet.
Form 4 is filed by a current qualified federal firearms licensee (FFL) registrant to transfer an NFA weapon to an individual or other entity (non-licensee).
ATF Form 4 is for NFA transfers from individuals to dealers and vice versa. Private citizens should also submit Form 4 when transferring an NFA firearm to a legal entity, such as a gun trust. However, a dealer would instead fill out ATF Form 3 when transferring an NFA item to another dealer or a government agency.
A statement of change in equity (also referred to as statement of retained earnings) is a business' financial statement that measures the changes in owners' equity throughout a specific accounting period. It covers the following elements: Net profit or loss.
"The law requires any transferee acquiring an interest in real property, manufactured home, or floating home subject to local property taxation, and that is assessed by the county assessor, to file a change in ownership statement with the county recorder or assessor.
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