In June 2025, The Vanguard Group, Inc. (“VGI”) announced plans to establish two wholly owned U.S. investment advisors, Vanguard Capital Management (“VCM”) and Vanguard Portfolio Management (“VPM”), each of which consists of distinct investment management teams and investment stewardship teams to manage various funds. In early January, Vanguard announced that it had completed this internal realignment.
Over the past week, Vanguard has filed over a thousand Schedule 13G amendments reporting that VGI is no longer treated as the beneficial owner of any of the portfolio company shares held by the various funds that are now managed by VCM and VPM. Companies that are in the throes of finalizing their proxy statements should check whether VGI made such a filing with respect to their stock.
While VCM and/or VPM may file new Schedule 13Gs reporting their beneficial ownership of some portfolio companies’ stock before those companies finalize their proxy statement, any such new Schedule 13G filings may not be due until May 15, 2026, and companies have no certainty as to whether the new ownership reports will be filed earlier. In the meantime, Vanguard has voluntarily provided an Illustrative Beneficial Ownership report to assist market participants with understanding how beneficial ownership of portfolio company securities might have been attributed to VCM and VPM had the internal realignment occurred on or immediately prior to December 31, 2025. However, VGI states that this information is derived from VGI’s publicly available data as of December 31, 2025, including VGI’s Form 13F filings, and notes that the information does not replace or modify any official beneficial ownership information previously filed with the SEC. Moreover, in Corporation Finance Interpretation 229.02 under Regulation S-K, the SEC Staff advised companies not to rely on Schedule 13F filings when reporting beneficial ownership under Item 403(a) of Regulation S-K.
This situation has presented a minor quandary for companies over whether and how to report Vanguard beneficial ownership in their proxy statements’ beneficial ownership table when they have learned of the Schedule 13G reporting no beneficial ownership by VGI, but neither VCM nor VPM has filed a Schedule 13G reporting their beneficial ownership of the company’s securities. On the one hand, companies may not timely know VCM’s and VPM’s beneficial ownership; on the other hand, companies also may be hesitant to completely omit a potentially significant share ownership position from the beneficial ownership table.
We believe there are a number of reasonable approaches to this situation. The proxy rules and Item 403 of Regulation S-K only require companies to report beneficial ownership of greater than 5% beneficial owners to the extent known by the Company “as of the most recent practicable date.” Moreover, as a result of amendments to the Schedule 13D/G reporting rules that went into effect in September 2024, beneficial ownership reporting is often based on out-of-date information and is only approximately correct, as addressed in our prior discussion set forth here. Companies that had already finalized their definitive proxy statements prior to VGI’s most recent Schedule 13G filing generally will not need to update their disclosures.
For companies that have not finalized their proxy statements, we believe one reasonable approach would be to (1) report the beneficial ownership indicated in the prior (not the most recent) Schedule 13G filed by VGI, particularly if the most recent VGI beneficial ownership filing occurred after the date that the company uses for its beneficial ownership table, and (2) state in a footnote to the beneficial ownership table that shares previously beneficially owned by VGI may now be owned by subsidiaries or divisions of VGI.
- Based on language in the most recent VGI Schedule 13G filings, that footnote disclosure could read as follows: “The Vanguard Group subsequently reported that due to an internal realignment it no longer has, or is deemed to have, beneficial ownership over Company securities beneficially owned by various Vanguard subsidiaries and/or business divisions.”
- In order to track other language in the VGI Schedule 13G filings reiterating that other VGI subsidiaries or divisions may now own company shares, the footnote might also state: “The Vanguard Group also reported that certain subsidiaries or business divisions that formerly had, or were deemed to have, beneficial ownership with The Vanguard Group, will report beneficial ownership separately (on a disaggregated basis).”
More generally, companies should carefully review the language that precedes their beneficial ownership table to make sure that it has an appropriate “knowledge” qualification, and that it accurately describes the date(s) as of which beneficial ownership is being reported.