Last week, Corp Fin issued three new CFIs relating to shareholder engagement and Schedule 13G eligibility as the Staff has continued to receive questions in the wake of the two CDIs issued about 18 months ago that caused some of the larger institutional investors to temporarily pause their engagement efforts and rethink their approach to engagement.
These new CFIs further clarify that routine engagement is not likely to threaten the passive condition required for institutional (Rule 13d-1(b)) and passive (Rule 13d-1(c)) filers looking to use Schedule 13G when it comes to these three types of engagement:
- Discussions initiated by companies;
- Discussions with persons engaged in a proxy solicitation; and
- Discussions with a company seeking to clarify disclosures made in SEC filing or other types of public communications.
Here is some nice commentary from Cooley’s Justin Kisner: “Don’t expect these new CFIs to shake things up the way the February 2025 guidance (temporarily) did. In our view, this round is confirmatory, not new guidance. It doesn’t reset Corp Fin views – and it shouldn’t be read as a signal that shareholders or issuers need to rethink how they show up to a routine engagement.
Rather, Corp Fin is doing what it did in February 2025: reiterating, through worked examples, three points that have been true all along: (i) whether a shareholder acquired – or is holding – its securities with a purpose or effect of ‘changing or influencing’ control of the issuer turns on all the relevant facts and circumstances, informed by the definition of ‘control’ in Exchange Act Rule 12b-2; (ii) the subject matter of the engagement can be dispositive; and (iii) the context in which the engagement takes place is also highly relevant.
It is worth remembering where this all comes from. In the 2023 adopting release ‘Modernization of Beneficial Ownership Reporting,’ Release No. 34-98704 (Nov. 7, 2023), the SEC explained that whether an investor is engaged in activity with the purpose or effect of changing or influencing control of an issuer and is therefore holding beneficial ownership with a disqualifying purpose or effect, is a facts-and-circumstances call. And because that inquiry is so fact-dependent, the SEC historically has kept its guidance on the topic fairly limited.
If you want the fuller discussion behind the SEC’s framework, it’s worth pulling the 1998 adopting release ‘Amendments to Beneficial Ownership Reporting Requirements,’ Release No. 34-39538 (Jan. 12, 1998). That is where the SEC laid out much of its reasoning and the factors relevant to the control determination. For the subject matter and context, the throughline across both rounds of guidance is the same.
If a shareholder discusses its views on a particular topic and how those views could inform its voting decision generally, that communication would not, by itself, disqualify the shareholder from reporting on a Schedule 13G. By contrast, where a shareholder uses an engagement to pressure management into adopting specific measures or policy changes, that looks a lot more like ‘influencing’ control of the issuer. CFI 103.12, issued in February 2025, laid out a set of examples applying that framework.”
Here are the three new CFIs:
- Question 103.13
Question: An issuer requests a meeting with a shareholder to discuss the shareholder’s views or voting decisions on matters that either were submitted for a vote at a past shareholder meeting or will be submitted for a vote at an upcoming shareholder meeting. If the shareholder reports its beneficial ownership of the issuer’s securities on a Schedule 13G in reliance on Rule 13d-1(b) or Rule 13d-1(c), can the shareholder participate in such a discussion without losing its eligibility to report on a Schedule 13G?
Answer: The context in which an engagement occurs is highly relevant to the determination of whether a shareholder is holding securities with a disqualifying purpose or effect of “influencing” control of the issuer. Generally, (1) an engagement initiated by the issuer itself or (2) a response to an issuer’s request to understand why the shareholder voted in a certain manner at a past shareholder meeting is less likely to be viewed as an attempt by the shareholder to “influence” control of the issuer. Therefore, participation in such a discussion would not, by itself, disqualify a shareholder from reporting on a Schedule 13G. The determination is based on all the relevant facts and circumstances. [September 2, 2026]
- Question 103.14
Question: Can a shareholder reporting its beneficial ownership on a Schedule 13G in reliance on Rule 13d-1(b) or Rule 13d-1(c) participate in discussions with a person engaged in a proxy solicitation with respect to a particular issuer without losing its eligibility to report on a Schedule 13G?
Answer: The fact that a shareholder discusses its views on a particular topic and how those views could inform its voting decisions with a person engaged in a proxy solicitation would not, by itself, disqualify the shareholder from reporting on a Schedule 13G. [September 2, 2026]
- Question 103.15
Question: A shareholder reporting its beneficial ownership on a Schedule 13G in reliance on Rule 13d-1(b) or Rule 13d-1(c) reviews the disclosures in an issuer’s filings, such as its proxy soliciting materials, and seeks clarification about particular facts or statements asserted in the filings. Would the shareholder lose its eligibility to report on a Schedule 13G if it contacts an issuer and seeks such clarification?
Answer: No. A shareholder would not be disqualified from reporting on a Schedule 13G solely because it engages with an issuer to better understand the issuer’s disclosures or other public communications. [September 2, 2026]
Authored by
Broc Romanek