Elon Musk’s SEC filings reserve the right to buy a larger stake in Twitter

Illustration by Kristen Radtke / The Verge; Getty Images

It means more speculation about Musk's true intentions now that he won't be a member of the board. The required filing for investors buying a significant chunk of a publicly traded company has been updated again by Musk.

The new form shows that the arrangement that prevented Musk from buying a larger share of the company is no longer in place. The result is proof that Musk's reversal had something to do with the legal requirements that would come with serving on the board.

The Schedule 13G form Musk filed with the SEC on April 4th came under scrutiny because it is for investors who plan to remain passive in a company.

An updated Scheduled 13D document that is appropriate for an active investor, detailing his stock purchases, and an agreement to not try to purchase more than 1 were some of the things he cleared up. The amended documents aren't enough to clear up the issue of how long he waited to disclose his share purchases.

Musk says he has 9.1 percent of outstanding shares. He doesn't own the largest stake in the company. Even though the ownership is distributed across all fund-holders, Protocol points out that The Vanguard Group mutual fund now owns over 80 million shares, which is enough for a 10.29 percent piece of the company.

The board of directors deal is off, and the new document is here, so what has changed? Section 4 contains language that limits Musk to a 14.9% stake in the company. The note indicates what the Reporting Person might do and it focuses on two things.

The filing was made on April 5th.

On April 4, 2022, the Reporting Person and the Issuer entered into a letter agreement (the “Agreement”) which provides that: (i) the Issuer will appoint the Reporting Person to the Issuer’s Board of Directors (the “Board”) to serve as a Class II director with a term expiring at the Issuer’s 2024 Annual Meeting of Stockholders; and (ii) for so long as the Reporting Person is serving on the Board and for 90 days thereafter, the Reporting Person will not, either alone or as a member of a group, become the beneficial owner of more than 14.9% of the Issuer’s common stock outstanding at such time, including for these purposes economic exposure through derivative securities, swaps, or hedging transactions.

The updated filing was registered on April 11th.

From time to time, the Reporting Person may engage in discussions with the Board and/or members of the Issuer’s management team concerning, including, without limitation, potential business combinations and strategic alternatives, the business, operations, capital structure, governance, management, strategy of the Issuer and other matters concerning the Issuer. The Reporting Person may express his views to the Board and/or members of the Issuer’s management team and/or the public through social media or other channels with respect to the Issuer’s business, products and service offerings.

In his letter to employees Sunday night, Parag Agrawal said of Musk that "we will remain open to his input" and that his letter suggests there will be plenty of it. How much of it comes in discussions with the board and management may determine how much of it actually comes to pass.

It is not clear what caused Musk to inform the board on Saturday morning that he wouldn't join them as a member. In the document, Musk says that he isn't planning to buy more shares of the company right now, but also says that he will be buying more shares in the future.