The staff of the Division of Corporation Finance, the Division of Investment Management, and the Division of Trading and Markets has issued a new statement offering relief from the authentication document retention requirements under Rule 302(b) of Regulation S-T due to “health, transportation, and other logistical issues raised by the spread” of COVID-19.
Rule 302(b) requires each signatory to a document that is filed electronically with the SEC to manually sign a signature page (or other document), before or at the time the electronic filing is made. The manual signature authenticates or adopts the signature that appears in typed form within the electronic filing. To facilitate authentication, the rule requires the company or other electronic filer to retain the signed documents for five years and to furnish copies to the SEC upon request.
COVID-19 has made compliance with such requirement difficult in some circumstances. Although the staff expects everyone to comply with the requirements of Rule 302(b) “to the fullest extent practicable,” due to the difficulties that filers and signatories may experience as a result of COVID-19, the staff will allow the signatory to retain the signed document and provide it to the filer as promptly as practicable in accordance with certain requirements. Specifically, the staff will not recommend enforcement action with respect to the requirements of Rule 302(b) if: (i) “a signatory retains a manually signed signature page or other document authenticating, acknowledging, or otherwise adopting his or her signature that appears in typed form within the electronic filing and provides such document, as promptly as reasonably practicable, to the filer for retention in the ordinary course pursuant to Rule 302(b),” (ii) such document indicates the date and time when the signature was executed,” and “the filer establishes and maintains policies and procedures governing this process.”
As an example of how the staff envisions satisfactory implementation of (i) above, the staff suggests that a signatory who is working remotely could “execute a hard copy of the signature page remotely and hold that page for delivery to the filer upon his or her return to the place of work.” The staff also recommends that a signatory may “provide to the filer an electronic record (such as a photograph or pdf) of such document when it is signed.”
The staff, as always, reminds signatories of the presumption that a signature is validly authorized, and advises of its expectation that filers subject to Regulation S-T will “maintain procedures to ensure that any typed signature in an electronic filing is affixed with the authority of the signatory.” Additionally, the staff reminds signatories of the potential for penalties (fines and even imprisonment) for willful violations and false and misleading statements under applicable federal law. As usual, the staff also states that the statement is staff guidance and not legally binding.
