Thought Leadership  •  May 31, 2023

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What is Section 16 Filing?

SEC Section 16 targets a particular subsection of corporate stakeholders. Specifically, anyone who is considered a beneficial owner of a company must file this form. Discover who needs to file, what the forms require and Section 16 filings solutions.

What Is a Section 16 Filing?

Section 16 is a subsection of The Securities Exchange Act. The section specifies so-called beneficial owners to publicly disclose their beneficial relationship with a company by filing a Section 16 form.

Section 16 forms refer to three different forms known as Form 3, Form 4 and Form 5. Here's what each of these forms includes:

SEC Form 3

Form 3 is filed by new directors, officers or shareholders. It's also filed after an IPO. Think of it as an initial public announcement. Until you have filed Form 3, you do not need to file the other forms.

SEC Form 4

Form 4 must be filed by beneficial owners, officers or directors when their holdings change materially. For example, if an officer receives a 5% increase in ownership stake, Form 4 should be filed.

SEC Form 5

Form 5 must be filed by beneficial owners, officers or directors to report any transactions not reported on Form 4.

Form 5 is similar to Form 4, so it can be confusing to know which one to file.

Use Form 5:

  • To report smaller transactions not reported on Form 4
  • For gifts or shares that were not reported earlier but could have been
  • As a catchall form if the deadline for a Form 4 were missed

Who Needs to File Section 16 Forms?

Anyone who owns 10% or more of a company, or is a named director or officer of the company, must file this form. That sounds straightforward. However, you yourself do not have to physically hold equity in a company to be subject to Section 16 requirements.

For example, if you're married to someone who is considered a beneficial owner, you're considered to be covered by Section 16 as well. If you do not own 10% on your own but hold 10% or greater investment through a group or entity, Section 16 still applies to you as an individual.

Section 16 Filing Requirements

SEC filing forms, including Section 16 forms, are using the SEC's electronic filing system, nicknamed EDGAR.

Form 3 must be filed within 10 days of a qualifying transaction, such as an IPO. Form 4 must be filed within two business days of an eligible transaction. Form 5 is required within 45 days of the company's fiscal year ending.

At DFIN, we have resources that ensure companies can meet SEC reporting requirements, including those with strict deadlines like Section 16. Our SEC reporting software, ActiveDisclosure, makes filling forms easier and faster. ActiveDisclosure allows you to integrate existing data in a guided workflow format that walks you through forms step by step. It's an all-in-one filing solution designed to make the process simple and straightforward. Discover why companies trust our financial reporting solutions when it comes to Section 16 filings.