On September 2, 2026, the U.S. Securities and Exchange Commission (SEC) issued a series of Corporation Finance Interpretations (CFIs) designed to provide much-needed clarity for beneficial owners who file Schedule 13G, a form used by passive investors holding more than five percent of a company’s equity securities. These new interpretations, presented in a question-and-answer format, aim to delineate the boundaries of permissible engagement between these significant shareholders and issuers, as well as with other investors, without jeopardizing their eligibility to file the less burdensome Schedule 13G instead of the more stringent Schedule 13D.
The guidance comes as a welcome development following earlier interpretations issued in February 2025, which had cast a shadow of uncertainty over interactions involving significant passive shareholders. Those previous interpretations, characterized by some as broadly chilling, had raised concerns that even routine discussions could be construed as an intent to "change or influence control" of an issuer, thereby triggering the requirement to file on Schedule 13D. This, in turn, could diminish investor and issuer visibility into the perspectives of these large shareholders, potentially hindering informed corporate governance and voting processes.
The new CFIs, authored by Andrew Freedman, Kenneth S. Mantel, and Andrew J. Astore of Olshan Frome Wolosky LLP, who based their analysis on the SEC’s memorandum, are expected to be favorably received by a wide spectrum of market participants, including 13G filers, activist investors, and publicly traded companies. The interpretations seek to foster a more robust and transparent corporate governance ecosystem by enabling shareholders to openly discuss their views and concerns prior to critical voting events.
Reassuring Investors and Issuers
The core of the SEC’s latest guidance revolves around clarifying what constitutes acceptable engagement for Schedule 13G filers. The interpretations aim to reassure large investors, particularly investment managers with fiduciary duties to their own clients, that they can participate in certain discussions without risking disqualification from filing on Schedule 13G. This is crucial, as maintaining passive status on Schedule 13G offers significant advantages in terms of disclosure requirements and flexibility compared to the more rigorous Schedule 13D filing.
The CFIs specifically address situations where a shareholder might engage with an issuer or another party involved in a proxy solicitation. By providing clear answers to specific scenarios, the SEC intends to reduce ambiguity and encourage constructive dialogue. The overarching principle is that the context of the engagement is paramount in determining whether a shareholder’s actions are motivated by a disqualifying purpose or effect of influencing control.
Key Scenarios Addressed by the SEC
The new CFIs tackle three principal scenarios that have been sources of concern for 13G filers:
1. Issuer-Initiated Meetings and Discussions on Voting Decisions:
Question 103.13 addresses a situation where an issuer requests a meeting with a shareholder to discuss their views or voting decisions on matters, whether past or future, that are subject to a shareholder vote. The SEC’s interpretation offers significant reassurance here. It states that generally, engagements initiated by the issuer itself, or responses to an issuer’s request for clarification on past voting decisions, are less likely to be viewed as an attempt by the shareholder to "influence" control. Therefore, participating in such discussions, by itself, would not disqualify a shareholder from reporting on Schedule 13G. The SEC emphasizes that the determination is based on all relevant facts and circumstances, underscoring the importance of context.
2. Discussions with Proxy Solicitors:
Question 103.14 tackles the common scenario of a Schedule 13G filer engaging in discussions with a person involved in a proxy solicitation concerning a particular issuer. The SEC clarifies that simply discussing their views and how those views might inform their voting decisions with a proxy solicitor would not, on its own, disqualify a shareholder from reporting on Schedule 13G. This is particularly important in the context of active proxy contests, where communication between significant shareholders and those soliciting proxies is often a necessary part of the process.
3. Seeking Clarification on Issuer Disclosures:
Question 103.15 addresses a shareholder’s proactive effort to understand an issuer’s public communications, such as proxy soliciting materials. The SEC confirms that reviewing an issuer’s filings and seeking clarification on specific facts or statements would not lead to disqualification from Schedule 13G reporting. Contacting an issuer solely to gain a better understanding of their disclosures or public statements is deemed acceptable and does not, by itself, preclude a shareholder from maintaining their passive filing status.
Background and Evolution of Guidance
The requirement to file Schedule 13D or 13G stems from Section 13(d) of the Securities Exchange Act of 1934, which mandates that any person who acquires beneficial ownership of more than five percent of a class of a company’s registered equity securities must report this acquisition to the SEC. The distinction between the two forms lies in the investor’s intent: Schedule 13D is for those who hold securities with the purpose or effect of changing or influencing control of the issuer, while Schedule 13G is for passive investors who do not have such intentions.
Historically, the SEC has provided guidance on what constitutes "influencing control." However, interpretations have sometimes been perceived as overly broad, leading to a chilling effect on communication. The February 2025 CFIs, for instance, were seen by many as raising the bar for permissible engagement, prompting a more cautious approach from significant shareholders. This created a dilemma for 13G filers who, while intending to remain passive, needed to engage with companies and other shareholders to make informed investment decisions and fulfill their fiduciary responsibilities.
The new CFIs represent a recalibration, aiming to strike a more balanced approach. By clarifying that certain types of engagement, particularly those initiated by issuers or focused on understanding disclosures, do not inherently indicate an intent to influence control, the SEC is facilitating a more open dialogue within the corporate governance landscape.
Implications for the Corporate Governance Ecosystem
The implications of these new CFIs are far-reaching and generally positive for the health of public company governance.
- Enhanced Shareholder Engagement: The guidance should embolden 13G filers to engage more freely in discussions that are crucial for informed decision-making. This includes understanding management’s strategy, evaluating proposals, and communicating voting intentions.
- Increased Transparency: While Schedule 13G is designed for passive investors, enabling them to engage without jeopardizing their status can lead to more informed shareholder participation, ultimately benefiting all stakeholders.
- Support for Activism (Indirectly): While the CFIs are not directly aimed at empowering activists, by clarifying the boundaries of engagement, they can indirectly support situations where passive investors might coalesce around certain issues, or where activist campaigns are met with more informed responses from passive shareholders.
- Reduced Compliance Burden and Uncertainty: For companies and investors alike, the clarity provided by the SEC reduces the uncertainty and potential compliance risks associated with engagement, allowing for more efficient and effective communication.
- Fiduciary Duty Considerations: For investment managers, the ability to engage in these discussions without immediate risk of disqualification is crucial for fulfilling their fiduciary duties to their clients, ensuring they are acting in the best interests of those they represent.
The public company governance ecosystem thrives on transparency and informed participation. By providing clearer guardrails for shareholder engagement, the SEC’s latest interpretations are a positive step towards fostering a more dynamic and responsive corporate environment. As the SEC itself notes in its interpretation, "The public company governance ecosystem benefits when shareholders can discuss their views with others in advance of a vote." These new CFIs are designed to facilitate exactly that.
The full text of the new Corporation Finance Interpretations, as published by the SEC on September 2, 2026, is available for reference, offering detailed guidance on these critical aspects of shareholder reporting and engagement. For further clarification or to discuss the implications of these developments, individuals are encouraged to consult with their regular Olshan attorney or any of the listed partners at Olshan Frome Wolosky LLP.
