In April 2020, Wilson Sonsini, together with two other leading Silicon Valley-based law firms, submitted a formal rulemaking petition to the U.S. Securities and Exchange Commission (SEC) asking the SEC to amend Rules 11 and 302 of Regulation S-T, as well as any other rules or forms necessary to permit such amendments to have their desired effect, to permit electronic signatures in addition to manual signatures. By June 2020, nearly 100 public companies had signed on in support of this petition.

On November 17, 2020, the SEC announced that it voted to adopt rules permitting, subject to certain requirements, the use of electronic signatures in connection with SEC filings that are required to be signed. This includes, among others, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, registration statements on Forms S-1 and S-3, Section 16 forms, and others.

Background

Rule 302(b) of Regulation S-T (Rule 302(b)) requires each signatory to an electronic filing to "manually sign a signature page or other document authenticating, acknowledging or otherwise adopting his or her signature that appears in typed form within the electronic filing."

In March 2020, as shelter-in-place orders were issued, the SEC issued a Staff Statement Regarding Rule 302(b) of Regulation S-T in Light of COVID-19 Concerns (updated in June), providing limited relief from the manual signature requirements of Rule 302(b). This Staff Statement is discussed in greater detail in our prior alert. Thereafter, in April, we initiated the formal rulemaking petition to formally request that the SEC amend its rules because we felt that the Staff Statement did not go far enough to permit electronic signatures for SEC filings.

Summary of Amendments

In the adopting release, the SEC cited, among other things, the issues raised by the rulemaking petition, in amending current Rule 302(b). Under the revised rule, the SEC will permit electronic signatures, subject to the following requirements:

• EDGAR Filer Manual Requirements. In parallel with adopting amendments to Rule 302(b) of Regulation S-T, the SEC is also adopting an updated EDGAR Filer Manual, Volume II (Nov. 2020), which includes new requirements relating to the electronic signature process.¹ Accordingly, an electronically signed authentication document permitted under Rule 302(b) must meet these new requirements.

  Under these new requirements, when a signatory signs an authentication document using an electronic signature, the signing process must, at a minimum: 1) require the signatory to present a physical, logical, or digital credential that authenticates the signatory's individual identity; 2) reasonably provide for non-repudiation of the signature; 3) provide that the signature be attached, affixed, or otherwise logically associated with the signature page or document being signed; and 4) include a timestamp to record the date and time of the signature.

  The updated EDGAR Filer Manual also includes new definitions for "electronic signature," "digital credential," and "non-repudiation."² While the SEC's definition of "electronic signature" is consistent with the definition used in the E-Sign Act,³ the SEC continues to believe that its requirements to retain authentication documents are not subject to the E-Sign Act because "authentication documents are records generated principally for governmental purposes rather than in connection with a business, consumer or commercial transaction."⁴

• Attestation Document. Prior to utilizing the electronic signature option in amended Rule 302(b), the signatory must manually sign a document attesting that, when using electronic signatures for purposes of Rule 302(b)(1), the signatory agrees that the use of such electronic signature constitutes the legal equivalent of such individual's manual signature for purposes of authenticating the signature to any filing for which it is provided.
• Retention of Attestation Document. The filer must retain the document discussed above as long as the signatory uses an electronic signature to satisfy the requirements in Rule 302(b)(1), and for a minimum period of seven years after the date of the most recent electronically signed authentication document. Keep in mind that Rule 302(b) continues to require filers to maintain copies of the authentication documents for each filing for a period of five years. In a first, the SEC is permitting these records to be retained electronically.
• Documents Furnished to SEC Upon Request. Upon request, the filer must furnish to the SEC a copy of any or all documents retained pursuant to Rule 302(b).

The adopting release includes companion amendments to various other rules and forms to permit these amendments to have their desired effect. Filers will continue to be permitted to use manually signed authentication documents rather than electronically signed authentication documents, if preferred.

What to Do Now?

The amended rules will be effective upon publication in the Federal Register, which we expect to be in the coming weeks.

If filers choose to use electronically signed authentication documents to collect signatures for their SEC filings, then they should confirm that their electronic signature software, and the manner in which the filer is using the software, meets the requirements set forth in the updated EDGAR Filer Manual.

In addition, filers must ensure that each individual signatory has submitted an attestation document as required under amended Rule 302(b)(1) prior to permitting that individual to electronically sign an authentication document for an SEC filing, and the filer must retain that attestation document for the applicable retention period.

[1] See Section 5.1.2 (Statutory Signatures) in EDGAR Filer Manual, Volume II: “Edgar Filing” (Version 55), November 2020.

[2] The term “electronic signature” is defined as an electronic sound, symbol, or process, attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record. The term “credential” is defined as an object or data structure exclusively possessed and controlled by an individual to assert identity and provide for authentication. The term “non-repudiation” is defined as assurance that an individual cannot falsely deny having performed a particular action.

[3] Electronic Signatures in Global and National Commerce Act, 15 U.S.C. § 7001, et seq., enacted in 2000.

[4] Application of the Electronic Signatures in Global and National Commerce Act to Record Retention Requirements Pertaining to Issuers under the Securities Act of 1933, Securities Exchange Act of 1934 and Regulation S-T, Release No. 33-7985 (June 14, 2001).