SEC Adopts Electronic Filing Mandates for Form 144 and Other Items

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Key Takeaways

  • The Securities and Exchange Commission (SEC) has adopted amendments to eliminate the paper filing option of several forms, including Form 144 and “glossy” annual reports, and to require such forms to be filed electronically through the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system.
  • The change will expedite the availability and transmission of the information contained on these forms, eliminate the burden of retrieving paper filings through the SEC’s in-person reference room, establish an online repository and database for record management, and provide universal access to documents.
  • The amendments include a six-month transition period for compliance, which will not commence for the Form 144 requirement until the date on which the SEC publishes a version of the EDGAR Filing Manual addressing updates for filing Forms 144 electronically on EDGAR.

New Electronic Filing Mandates

Rule 101 of Regulation S-T sets forth the general rules and regulations for electronic filings. Rule 101(a) mandates the electronic filing of more than 400 different forms, schedules, reports and applications. Rule 101(b) identifies several documents that filers are permitted to file either electronically or in paper format.

On June 3, 2022, the SEC announced that it adopted amendments that would, among other things, require the electronic filing of most of the documents identified in Rule 101(b), including:

  • Notices of proposed sales on Form 144.
  • Glossy annual reports to security holders.
  • Notices of exempt solicitations and exempt preliminary rollup communications.
  • Annual reports for employee benefit plans on Form 11-K.
  • Periodic reports and reports with respect to distributions of primary obligations filed by foreign private issuers and multilateral development banks.
  • Documents filed pursuant to the Investment Company Act.

Under the adopted amendments, the foregoing documents would be moved from Rule 101(b) to Rule 101(a) as mandated electronic submissions.

Impact on Form 144 Filings

The electronic filing mandate will have a significant impact on Form 144 filings. First, it will mark a change in how nearly all Forms 144 are currently submitted. According to the SEC, of the approximately 30,000 Forms 144 that were filed in calendar year 2021, only 234 (or approximately 1%) were filed electronically on EDGAR. The remaining 99% were filed on paper or as a PDF via email, which will no longer be permitted under the amended rules.

Second, it will provide immediate and universal access to the information on Forms 144, which report details of certain proposed sales by “affiliates” of an issuer (e.g., directors, officers and 10% stockholders), including under Rule 10b5-1 trading plans. Under the existing rules, paper filings are typically only available for the public to review in person at the SEC; therefore, the information on trading plans and other proposed sales contained on approximately 99% of Forms 144 were largely unavailable to the public. Under the amended rules, such trading details would immediately become publicly available on EDGAR.

The SEC also amended Rule 144(h)(1) to remove the requirement that a copy of the Form 144 notice be sent to the principal exchange. Such notice requirement is no longer necessary with an online, universally accessible filing database.

Also, in an effort to make Form 144 electronic filings streamlined, the SEC plans to make the form an online fillable document that would facilitate electronic filing. The fillable form would be similar to those currently available on EDGAR for filing Forms D, 3, 4 and 5.

Transition Periods

The SEC is providing filers with a six-month transition period to begin submitting these documents electronically in accordance with the EDGAR Filer Manual. For all forms other than Form 144, this transition period will commence on the effective date of these amendments, which is 30 days after publication in the Federal Register. For Form 144, the six-month period will commence on the date on which the SEC publishes an updated version of the EDGAR Filer Manual that covers how to file Forms 144 on EDGAR. The SEC indicated that it expects to consider the adoption of this updated version of the EDGAR Filer Manual in September.

Other Amendments

The amended rules also require the use of Inline XBRL for the filing of financial statements and accompanying notes to the financial statements required by Form 11-K, which would mirror the XBRL implementation requirements for annual reports on Forms 10-K, 20-F and 40-F. The transition period for this requirement will be three years following the effective date. The amendments also cover technical updates to remove certain outdated references on Forms F-10, F-X and CB.

Final Rule Release

The final rule release adopting the amendments can be found here: https://www.sec.gov/rules/final/2022/33-11070.pdf.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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