Tips: Form 5 Filing Requirements & Proxy Statement Obligations
Determine Whether Form 5 is Required
Filers often file a Form 5 unnecessarily, in the mistaken belief that a Form 5 is required. As discussed above, Form 5 is not an annual disclosure form required of all insiders. Instead, a person is required to file a Form 5 with respect to a fiscal year only if he or she was an insider during some or all of the issuer’s fiscal year and one or more of the following circumstances exist: (i) the insider engaged in a reportable transaction during the fiscal year that was exempt from Section 16(b) (other than an exercise or conversion of a derivative security or a transaction exempted by Rule 16b‑3(d), (e), or (f), all of which are reportable on Form 4) and the insider did not report the transaction earlier on Form 4 on a voluntary basis; (ii) the insider engaged in a transaction during the fiscal year that should have been reported on Form 4 but was not, or engaged in a transaction during a prior fiscal year that should have been reported on Form 4 or Form 5 but was not; (iii) the insider effected one or more “small acquisitions” during the fiscal year that qualified for deferred reporting on Form 5 pursuant to Rule 16a‑6, and the insider did not report the acquisition(s) earlier on Form 4; or (iv) the insider omitted a holding from his or her Form 3, and the insider did not include the holding in an earlier Form 5 or in an amendment to the Form 3.
Unless an insider failed to report a transaction or holding under one or more of these circumstances, the insider is not obligated to file a Form 5. In particular, an insider is not required to file a Form 5 to (i) re‑report a gift or other transaction that was eligible for deferred reporting on Form 5 but was reported earlier on Form 4 on a voluntary basis, (ii) re‑report a transaction or holding that was previously reported late, on Form 3, Form 4, or Form 5, (iii) report routine acquisitions under dividend reinvestment plans (“DRIPs”) and tax-conditioned plans (including qualified plans, excess benefit plans, and stock purchase plans, as those terms are defined in Rule 16b-3), because those transactions are exempt from reporting under Rules 16a-3(f)(1)(i)(B) and 16a-11 (acquisitions of additional securities resulting from a dividend reinvestment feature of an employee benefit plan also are not reportable, based on Rule 16a-11, provided that the issuer also maintains a DRIP that satisfies the conditions of Rule 16a-11, and the dividend reinvestment feature of the employee plan operates in a substantially similar manner–see American Home Products Corp. (1992)), (iv) update the insider’s total holdings under a 401(k) plan, dividend reinvestment plan, employee stock purchase plan, or similar plan to reflect acquisitions during the year that were exempt from the reporting requirements, (v) update the insider’s total holdings of derivative securities to reflect expirations or forfeitures during the year that were exempt from reporting under Rule 16a‑4(d), or (vi) list or reconcile all of the insider’s holdings of issuer equity securities. An insider may choose to report any of these transactions or holdings on a voluntary basis, but none compels the filing of a Form 5.
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