In April 2020, Fenwick & West, together with two other leading Silicon Valley-based law firms, submitted a formal rule-making petition to the U.S. Securities and Exchange Commission (SEC) requesting that the SEC adopt new rules permitting the use of electronic signatures when executing authentication documents. This petition noted the difficulties presented by the COVID-19 pandemic and improvements in electronic signature software technology, as well the routine use of electronic signatures in the operations of companies prior to the pandemic. Almost 100 public companies jointly submitted a letter in support of our petition in June 2020.
On November 17, 2020, the SEC issued a release adopting amendments to Regulation S-T and the Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) Filer Manual (EDGAR Filer Manual) to permit the use of electronic signatures in connection with electronic filings on EDGAR that are required to be signed. The new rules will be effective immediately upon publication in the Federal Register.
Before a signatory initially uses an electronic signature to sign a document that will be filed electronically, the new Rule 302(b)(2) requires the signatory to manually sign a document attesting that the signatory agrees that the use of an electronic signature in any filing constitutes the legal equivalent of such individual’s manual signature for purposes of authenticating the signature to any filing for which it is provided. The electronic filer must retain this manually signed document for as long as the signatory may use an electronic signature to sign an authentication document and for a minimum period of seven years after the date of the most recent electronically signed authentication document.
The requirements for electronic signatures will be set forth in the EDGAR Filer Manual. They will specify that when a signatory signs an authentication document using an electronic signature, the signing process for the electronic signature, at a minimum, must:
- Require the signatory to present a physical, logical or digital credential that authenticates the signatory’s individual 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, such that the signatory has notice of the substance of the document and an opportunity to review, and may confirm that the signatory signed such document at a later date
- Include a timestamp to record the date and time of the signature
We will follow up with an update regarding the specific requirements and practical implementation upon publication of the updated EDGAR Filer Manual.
The SEC’s release notes that the requirements are specifically designed to allow for different types and forms of electronic signatures, so long as the above criteria are met. We believe that the use of electronic signatures under the new rules will promote efficiency in the filing process, with no loss of documentary integrity for filed documents. Reporting companies will now be able to file periodic and current report and registration statements using electronic signatures. The electronic signature process will also be available for use with the CEO and CFO certifications required to be filed with Forms 10-K and 10-Q.