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Elon Musk’s ‘passive’ Twitter share starts with voting on the edit button

  • Elon Musk announced its 9.2% stake in Twitter by submitting a form to those who do not seek to influence or change control of a company
  • But the 50-year-old South African-born billionaire is not exactly one who remains passive.
  • Twitter is particularly vulnerable to outside pressure because the company’s founders do not have much voice control over its future

When Elon Musk revealed his share of Twitter, he had a choice.

Shareholders who intend to remain “passive” – ​​those who do not seek to influence or change control of a company – submit a shorter form to the US Securities and Exchange Commission, called a 13G. Those who crave table seats or seismic shakeups typically file a longer and more in-depth form, a 13D, within 10 days of purchasing their bet. The rule applies to anyone who acquires 5% or more of a public company’s shares.

Musk announced its 9.2% stake by filing 13G. But the billionaire, 50, is not exactly one who remains passive.

The CEO of Tesla Inc. and SpaceX has called on Twitter for “failure to adhere to the principles of free speech” and the need to eradicate cryptocurrency scams that are productive on the social media platform co-founded by his friend Jack Dorsey. Musk is also among Twitter’s most viewed users with more than 80 million followers. Late Monday, he asked them – in a Twitter poll – if they would like an edit button, a feature that many users of the platform have long demanded.

“The idea that Elon Musk falls into a passive category is probably a stretch. He’s not the most passive guy,” said Jill Fisch, a securities law professor at the University of Pennsylvania. “One has to ask the question: Will Elon Musk really be happy with an effort of this magnitude and remain passive?”

Twitter is particularly vulnerable to outside pressure because, unlike Alphabet Inc., Meta Platforms Inc., Amazon.com Inc. and Snap Inc., the company’s founders do not have much voice control over its future.

Fisch noted that the status of Musk’s shareholding may change – technically, investors may file a 13G and then change their mind. A 13D requires more disclosure – shareholders need to say what their plans are and how they will finance the purchase of the stock. Musk and Jared Birchall, the head of his family office, did not respond to inquiries about his intentions. The filing with the SEC shows that the date of the event that triggered the publication was March 14th.

With Twitter’s annual meeting on May 25 fast approaching, it’s probably too late for this year if Musk aims to push for too drastic changes. But the size of his effort means he can still exert enormous influence if he chooses to.

“He’s not trying to get board seats, take over the board or pressure the company to sell himself,” said Eleazer Klein, partner at law firm Schulte Roth & Zabel. “He’s not trying to be an activist shareholder. But you can be influential without being an activist. He can certainly talk to the company and say ‘I’m worried about crypto, and as a shareholder I want you to know my views.” “

Other securities law experts said the disclosure of his share with a “passive” application gives Musk more flexibility and makes everyone guess what his real intentions are.

“Musk seems to advocate for change, not control,” said Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware. “But it’s going to be a mess for Twitter, because Elon Musk is not your regular shareholder.”

Whether Musk remains passive or switches to active, Twitter shares rose 27% on Monday, a signal that shareholders welcome his investment – and his likely involvement in the company’s direction.

“Whether it’s a G or a D, you’re going to hear a lot from him,” Elson said. “He’s a thundercloud going in. He’s a very vocal, attentive and attention-seeking person.”



Elon Musk’s ‘passive’ Twitter share starts with voting on the edit button

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