10% Beneficial Owner
A 10% beneficial owner is any person or entity that owns more than 10% of any class of a company's equity securities. They become "insiders" under Section 16 and must file Form 3, Form 4, and Form 5 reports, and are subject to short-swing profit rules.
The Trader's Take
The Signal
Large shareholders crossing 10% signals significant conviction. Subsequent purchases show continued accumulation.
The Noise
Index fund rebalancing can cause 10% threshold crossings without fundamental conviction.
Actionable Insights
- 1Watch for Form 3 filings that signal new 10% owners.
- 2Monitor 13D filings for activist investors crossing 5%.
- 3Track whether 10% owners are increasing or decreasing positions.
- 4Distinguish between institutional holders and activist investors.
Regulatory Context & Context
10% Beneficial Owner vs Beneficial Owner
10% Beneficial Owner
A 10% beneficial owner is any person or entity that owns more than 10% of any class of a company's equity securities. They become "insiders" under Section 16 and must file Form 3, Form 4, and Form 5 reports, and are subject to short-swing profit rules.
Beneficial Owner
A beneficial owner is a person who enjoys the benefits of ownership of securities even if the title is in another name. For SEC reporting purposes, this includes direct ownership, indirect ownership through trusts or partnerships, and ownership by family members.
Common Misconceptions
10% owners are subject to Section 16 rules even if they are not officers or directors.
Crossing 10% doesn't require intent to influence—it's automatic based on ownership.
The 10% threshold is calculated per class of equity securities, not total ownership.
Frequently Asked Questions
When does someone become a 10% beneficial owner?
When they acquire more than 10% of any class of a company's registered equity securities. This includes direct ownership and indirect ownership through trusts or family members.
What filings are required for 10% owners?
10% beneficial owners must file Form 3 (initial statement), Form 4 (changes in ownership within 2 days), and Form 5 (annual statement). If acquiring with intent to influence, Schedule 13D is also required at 5%.
Is a 10% owner considered an insider?
Yes, under Section 16 of the Securities Exchange Act, 10% beneficial owners are classified as insiders alongside officers and directors, and are subject to reporting requirements and short-swing profit rules.