On Nov. 17, the Securities and Exchange Commission (the SEC or the Commission) adopted new rules to permit the use of electronic signatures in signature authentication documents in connection with certain filings with the Commission, including filings submitted via EDGAR. The final rule became effective on Dec. 4 and includes amendments to Regulation S-T and the EDGAR Filer Manual (the Manual) as well as numerous corresponding revisions to rules and forms under the Securities Act of 1933, Securities Exchange Act of 1934 and Investment Company Act of 1940.

Background

Rule 302(b) of Regulation S-T previously required that signatories to a filing submitted via EDGAR manually sign a signature page or other document authenticating any electronic signature that appeared in typed form within such filing. In March, the SEC’s Division of Corporation Finance, Division of Investment Management and Division of Trading and Markets issued a statement relaxing the manual signature requirements of the rule in light of the COVID-19 pandemic and providing that the staff would not recommend enforcement action if signatories used electronic signatures to execute authentication documents, provided signatories complied with all other requirements of Regulation S-T. The amendments reflect a permanent implementation of the relief provided in the March guidance.

In light of the widespread use of electronic signatures and technological development in the authentication and security of such signatures, the SEC is permitting electronic signatures to provide flexibility in complying with authentication requirements while maintaining procedural safeguards consistent with the evidentiary purposes of the authentication document.

Summary of Rule Amendments

Authentication Document Verification Requirements

The amendments to the Manual provide that when a signatory signs an authentication document using an electronic signature, the signing process for the electronic signature must:

• Present a physical, logical or digital “credential” that authenticates the signatory’s identity.
• Reasonably provide for “non-repudiation” of the signature.
• Provide that the signature be attached, affixed or otherwise logically associated with the signature page or document being signed.
• Include a time stamp to record the date and time of the electronic signature.

The amendments to the Manual define the term “credential” as an object or data structure exclusively possessed and controlled by an individual to assert identity and provide for authentication and “non-repudiation” as assurance that an individual cannot falsely deny having performed a particular action.

Additional Signature and Document Retention Requirements

To further the authentication requirements, new Rule 302(b)(2) requires that before any signatory signs an authentication document using an electronic signature, such signatory must also manually sign a document attesting that the signatory agrees that the use of an electronic signature constitutes the legal equivalent of a manual signature for purposes of authenticating the signature to any filing. Such manually signed document must be retained for as long as the signatory uses an electronic signature to sign an authentication document and for at least seven years after the date of the most recent electronically signed authentication document, and a copy must be provided upon request to the Commission. New Rule 302(b)(3) provides that manually signed documents retained pursuant to Rule 302(b)(3) may be stored electronically.

The Commission also amended corresponding rules and forms under the Securities Act of 1933, Securities Exchange Act of 1934 and Investment Company Act of 1940 to allow for the use of electronic signatures in authentication documents in connection with certain other filings that contain typed rather than manual signatures. The amendments extend parallel treatment to such filers in allowing electronically signed authentication documents under generally the same conditions applicable to electronic filers under Rule 302(b).