On November 17, in response to a formal rulemaking petition that garnered support from nearly 100 public companies, the Securities and Exchange Commission (SEC) issued a final rule amending Regulation S-T and the Electronic Data Gathering, Analysis and Retrieval system (EDGAR) Filer Manual to permit the use of electronic signatures when electronically filing documents with the SEC. The amendments will be effective upon publication in the Federal Register, though the SEC indicated in its November 20 Statement that it will not take enforcement action against issuers who elect to comply with the amendments before their effectiveness so long as signatories comply with the new requirements.
Amended Rule 302(b) and Other Amendments
Rule 302(b) of Regulation S-T, as amended, will permit a signatory to an electronic filing to electronically sign the document, provided that the signatory follows certain procedures and the electronic signature meets certain requirements specified in the EDGAR Filer Manual. Under those requirements, the electronic signing process must, at a minimum do the following:
- 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.
- Include a timestamp to record the date and time of the signature.
Additionally, before a signatory using an electronic signature, new Rule 302(b)(2) requires the signatory to manually sign a document attesting that the use of an electronic signature constitutes the legal equivalent of the signatory’s manual signature for purposes of authenticating the signature. Issuers must retain the manually signed attestation for as long as the signatory may use an electronic signature to sign a document and for a minimum of seven years after the date of the most recent electronically signed document and furnish a copy of the attestation to the SEC upon request.
The foregoing requirements and certain associated definitions will be more specifically set out in the EDGAR Filer Manual.
Existing Requirements under Rule 302(b) and Further COVID-19 Relief
Until the new rules are effective, subject to early compliance, Rule 302(b) will continue to require signatories to manually sign documents prior to or at the time of the electronic filing, and issuers must retain the manually signed document for a period of five years and furnish a copy to the SEC upon request. As discussed in our March 25 blog post, however, the SEC provided relief in light of the COVID-19 pandemic by electing to forego enforcement action with respect to the requirements of Rule 302(b) if the following are true:
- A signatory retains a manually signed signature page or other document authenticating, acknowledging, or otherwise adopting his or her signature that appears in a typed form within the electronic filing and provides such document, as promptly as reasonably practicable, to the filer for retention in the ordinary course according to Rule 302(b) (For example, if a signatory is teleworking, the signatory 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).
- Such document indicates the date and time when the signature was executed.
- The filer establishes and maintains policies and procedures governing this process.
The foregoing relief will remain in effect until the SEC provides public notice otherwise, which will be published at least two weeks before the announced termination date.
The continuation of the relief provided in connection with the COVID-19 pandemic and the adoption of rules permitting the use of electronic signatures provide issuers with much needed and welcome flexibility concerning the signature and retention process associated with electronically filed documents.