Securities Regulation Daily Wrap Up, MERGERS AND ACQUISITIONS—SEC staff issue CFIs on activism, tender offers, and more, (Jul 10, 2026)
The activism-related CFIs focus on what many would consider traditional corporate governance topics, such as changing board composition.
The SEC staff recently rebranded the Division of Corporation Finance’s Compliance & Disclosure Interpretations (C&DIs) as Corporation Finance Interpretations (CFIs) (all of the above originally known as the Telephone Interpretations Manual) and has begun issuing new CFIs on select topics, including shareholder activism, tender offers, certain types of swaps transactions, and crowdfunding. The governance-related guidance builds upon other guidance issued by SEC staff within the past year that, on its surface, likely curbed some engagements between shareholders and companies (Regulation 13D-G, proxies, tender offers, crowdfunding).
Activist investing. The SEC staff issued new CFIs that address some forms of shareholder activism. For example, a new CFI explains that, for purposes of Schedule 14A, investors in an entity (such as a limited partnership) would be “participants” regarding that entity’s purpose of raising funds to seek governance changes (e.g., alter board composition) at a target company’s shareholders’ meeting. The specific Schedule 14A instruction at issue would apply this result to each investor who invested more than $500 in the entity.
With respect to Schedule 13D, SEC staff explained that certain activities may require the disclosure of the persons behind an entity engaged in an activism campaign at a target company. Specifically, “the identities of the investors in an entity formed for the purpose of acquiring securities of a specific issuer and engaging in an activism campaign at that issuer must be disclosed,” said the CFI. A second CFI clarified that SEC staff also believe that certain instructions within Schedule 13D would not limit the information that must be disclosed merely because a Schedule 13D reporting person is a general or limited partnership and not a natural person.
Tender offers. According to SEC staff, in some types of tender offers, required disclosures may be made via a widely disseminated press release. Specifically, two new CFIs address the situation where an issuer or bidder must publish, send, or give the required disclosures to security holders regarding a tender offer in which the consideration is structured to involve only cash and/or exempt securities.
Exchange Act Rules 13e-4 (no specific provision) and 14d-6 (“other methods”) spell out the disclosure requirement and methods of dissemination. The SEC staff explained that technological evolutions had made additional methods of disseminating tender offer disclosures possible.
As a result, an issuer or bidder may publish a press release that is “issued as soon as practicable on the date of commencement of the tender offer through a widely disseminated news or wire service, and which contains the disclosure required by [Rules 13e-4(d)(3) and 14d-6(d)(2)] and an active hyperlink to a website address where security holders may access the tender offer materials, letter of transmittal (if any), and any other documents relating to the offer.”
The twin CFIs impose additional requirements, although those for bidders differ slightly from those for issuers regarding the mailing or furnishing of tender offer materials. For one, the tender offer also must not be subject to Rule 13e-3. Second, an issuer must mail or otherwise furnish promptly the tender offer materials to any security holder requesting the materials under the press release or otherwise. In the case of a bidder, the bidder must mail via first class mail or otherwise furnish with reasonable promptness the bidder’s tender offer materials to securities holders requesting them under the press release or otherwise.
Total return equity swaps. A set of new CFIs addressing Exchange Act Regulation 13D-G explain when SEC staff believe that persons could be beneficial owners in the context of standard total return equity swaps (TRS). One of the three CFIs answers whether a TRS that settles exclusively in cash, only refers to a class of equity securities to identify a reference security, and does not confer any voting or investment power may cause the purchaser to become a beneficial owner of the reference securities or other equity securities held by a counterparty for hedging purposes. SEC staff said this would not result in beneficial ownership absent some arrangement that confers powers or rights outside the TRS or which seeks to evade applicable regulations.
A second CFI tackled the question of when a person may be deemed to be a beneficial owner of equity securities. Said the SEC staff: “A person may be “deemed” a beneficial owner of equity securities pursuant to Rule 13d 3(b) if the person uses an arrangement with the purpose or effect of preventing the vesting of beneficial ownership as part of a plan or scheme to evade the reporting requirements of Section 13(d) or 13(g).”
Still in the TRS context, a third CFI posited that the phrase “plan or scheme to evade” as used in the applicable regulation would mean “generally the intent to enter into an arrangement that creates a false appearance or an illusion contrary to the actual facts.” The staff analysis thus suggested what is required to meet the mental state contemplated by the regulation.
Crowdfunding. A new CFI addresses when Regulation Crowdfunding’s Rule 202(b) may be invoked to end an issuer’s ongoing reporting obligation. Specifically, the CFI asked “[c]an the issuer avail itself of Rule 202(b)(2) after it has filed one annual report, treating the crowdfunding vehicle as ‘one’ holder of record?” The SEC staff answered in the negative. According to the CFI, the reporting obligation would continue until one of the conditions in other subsections of Rule 202(b) has occurred or the number of investors drops below 300.
RegulatoryActivity: AlternativeInvestmentFunds BeneficialOwnership BrokerDealers CorporateGovernance DirectorsOfficers ESGNews FedTracker GCNNews Securities HedgeFundsNews InvestorEducation MergersAcquisitions PrivateEquityNews Proxies PublicCompanyReportingDisclosure RiskManagement ShareholderActivismNews