- With Twitter’s annual meeting on May 25 swiftly approaching, it’s probably too late to make major changes this year if Musk want to do so.
- Regardless of whether Elon Musk remains passive or becomes active, Twitter shares surged 27% on Monday, indicating that stockholders welcome his investment.
- Elon Musk had a choice when he announced his shareholding in Twitter Inc.
- Shareholders who choose to remain “passive” — that is, those who do not attempt to influence or alter ownership of a business — must submit a shorter form with the US Securities and Exchange Commission, called a 13G. Individuals seeking board seats or seismic shifts often submit a larger, more detailed form, a 13D, within ten days after purchasing their interest. The regulation applies to anybody who acquires 5% or more of the equity of a public firm.
- Musk disclosed his 9.2 percent ownership in a 13G filing. However, the 50-year-old millionaire is far from inactive. Tesla Inc. and SpaceX CEO Elon Musk has chastised Twitter for “failing to adhere to free speech norms” and emphasised the need of rooting out cryptocurrency frauds that are rampant on the social media network co-founded by his buddy Jack Dorsey. Musk is also one of the most followed individuals on Twitter, having over 80 million followers.
- “The notion that Elon Musk is passive is perhaps an exaggeration. He is not the most passive individual,” said Jill Fisch, a University of Pennsylvania securities law expert. “One has to ask: Is Elon Musk really content with a stake this large and staying passive?”
- Twitter is especially sensitive to external pressure because, unlike Alphabet Inc., Meta Platforms Inc., Amazon.com Inc., and Snap Inc., the company’s founders do not have specific voting rights over the company’s destiny.
- Fisch observed that Musk’s shareholding status might alter – theoretically, investors can file a 13G and then reverse their decision. A 13D demands further information — stockholders must state their intentions and how they intend to finance the acquisition of the shares. Musk and Jared Birchall, the head of his family office, did not reply to requests for comment on his plans.
- With Twitter’s annual meeting on May 25 swiftly approaching, it’s probably too late to make major changes this year if Musk want to do so. However, due to the magnitude of his shareholding, he retains great clout if he so desires.
- “He is not seeking board seats, attempting to seize control of the board, or pressuring the business to sell itself,” said Eleazer Klein, a partner at the law firm Schulte Roth & Zabel. “He is not attempting to be a shareholder activist. However, it is possible to be influential without becoming an activist. He may easily approach the corporation and said, ‘I’m worried about cryptocurrency, and as a shareholder, I want you to understand my concerns.'”
- According to several securities law experts, Musk’s decision to begin his interest disclosure with a “passive” filing affords him more freedom and leaves everyone wondering about his true intentions.
- “It seems as if Musk is arguing for change, not control,” said Charles Elson, founding director of the University of Delaware’s Weinberg Center for Corporate Governance. “However, it will be a disaster for Twitter, since Elon Musk is not your typical shareholder.”
- Whether Musk remains passive or takes an active role in the company’s management, Twitter shares rose 27% on Monday, indicating that shareholders welcome his investment – and his potential engagement in the company’s destiny.
- “Whether it’s a G or a D, you’re going to hear from him a lot,” Elson said. “He’s like a storm cloud approaching. He is an outspoken, observant, and attention-seeking guy.”
