The Rule 13d-3 percentage worked across two funds and a separate account, with the 60-day rule, the share count that moves on its own, and the errors that hide a filing.
Beneficial ownership for Schedule 13D or 13G is the shares the adviser votes or invests across every fund and account, plus shares it can acquire within 60 days, divided by the shares outstanding plus those same 60-day shares, and nobody else's. An illustrative adviser with 2,400,000 shares and 400,000 exercisable warrants in a company with 48,000,000 shares outstanding owns 2,800,000 / 48,400,000 = 5.785 per cent, over the 5 per cent filing threshold, though no single fund holds more than 3.125 per cent.
Worked in full in The Private Fund Compliance Officer by Julian R. Sterling, with every figure reproduced in a free workbook.See the book on Amazon →
Section 13(d) of the Exchange Act requires a filing by any person who becomes the beneficial owner of more than 5 per cent of a class of voting equity securities registered under the Act. Rule 13d-3 defines beneficial ownership as voting power or investment power, held directly or indirectly, alone or shared. Two features of the rule decide most private fund calculations.
A fictional private equity adviser has built a position in a listed company across two funds and a separate account over which it has voting and investment power. The issuer's latest quarterly report shows 48,000,000 shares outstanding.
| Position | Shares | Treatment |
|---|---|---|
| Fund I, common shares | 1,500,000 | Held |
| Fund II, common shares | 700,000 | Held |
| Separate account with voting and investment power | 200,000 | Held |
| Fund II, warrants exercisable now | 400,000 | Right to acquire within 60 days |
| Fund I, convertible notes, convertible in 90 days | 300,000 | Excluded until within 60 days |
Beneficial ownership % = (shares held + shares acquirable within 60 days) / (shares outstanding + the same person's shares acquirable within 60 days)
Numerator = 1,500,000 + 700,000 + 200,000 + 400,000 = 2,800,000
Denominator = 48,000,000 + 400,000 = 48,400,000
2,800,000 / 48,400,000 = 5.785%
Excel: =(SUM(B2:B4)+B5)/(48000000+B5)
At 5.785 per cent the adviser has crossed the threshold. Since the 2024 amendments, a Schedule 13D is due within 5 business days of crossing. An adviser eligible for Schedule 13G as a qualified institutional investor, because it acquired the shares in the ordinary course and without the purpose or effect of influencing control, files within 45 days after the end of the calendar quarter in which it crossed. A private equity adviser with board seats or an activist plan will usually not qualify for the short form, and that judgement belongs in the file next to the arithmetic.
Selling 380,000 shares would bring the position back to 5.000 per cent, which is not more than 5. It does not undo the crossing: the filing obligation arose on the day the line was passed.
The percentage can cross the line with no trade at all. The adviser's holdings are fixed below; only the shares outstanding change. A rise caused only by the issuer shrinking its share count is generally not itself an acquisition, so on its own it may not start the Schedule 13D clock, but the next purchase made above the line does, and the adviser must know where it stands before it trades.
| Shares outstanding | Held shares only | With 60-day warrants |
|---|---|---|
| 52,000,000 | 4.615% | 5.344% |
| 50,000,000 | 4.800% | 5.556% |
| 48,000,000 | 5.000% | 5.785% |
| 46,000,000 | 5.217% | 6.034% |
| 44,000,000 | 5.455% | 6.306% |
The held-only column sits exactly at 5.000 per cent today, so any buyback at all pushes it over, and the warrant column is over at every share count in the table. Monitoring has to read each new share count the issuer reports, not just the adviser's own trade blotter. The same arithmetic, above 10 per cent, can make the adviser a Section 16 insider, with the short-swing exposure worked in how Section 16(b) short-swing profits are calculated.
How to turn monitoring like this into a tested control, with the working documents the book describes, is in the free companion files for this book.
Yes, if they are exercisable within 60 days. Rule 13d-3(d)(1) treats the underlying shares as outstanding for the holder alone, so they are added to both the numerator and the denominator. In the worked case 400,000 warrant shares take ownership from exactly 5.000 per cent to 5.785, turning no filing into a filing.
Yes. An adviser with voting or investment power over several funds and accounts is the beneficial owner of all of them. Two funds at 3.125 and 2.273 per cent and a 200,000 share separate account add up to 5.785 per cent for the adviser, above the threshold although each fund is far below it.
Within 5 business days of crossing 5 per cent, since the amendments that took effect in 2024. A qualified institutional investor eligible for Schedule 13G files within 45 days after the end of the calendar quarter in which it crossed. Selling back to 5.000 per cent, 380,000 shares in the worked case, does not undo the obligation.
This article is one calculation from The Private Fund Compliance Officer. The book takes the same case from first principles to the decision, chapter by chapter, and every figure it prints is a live formula in the free companion workbooks.
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