On November 17, 2020, the U.S. Securities and Exchange Commission (SEC) adopted amendments to Regulation S-T1 to permit to the use of electronic signatures in signature authentication documents required under Regulation S-T in connection with EDGAR filings that are required to be signed. Although the amendments become effective when the adopting release is published in the Federal Register, the staff of the SEC's Division of Corporation Finance (Staff) issued a statement on November 20, 2020, indicating that the Staff will not recommend that the SEC take enforcement action with respect to the requirements of Rule 302(b) of Regulation S-T in advance of such time, provided that a signatory complies with all of the requirements of amended Rule 302(b).2 The Staff provided the accommodation in light of the ongoing concerns with obtaining signatures during the COVID-19 pandemic. The rule amendments are reflected in the updated EDGAR filing manual.3
Prior to the amendments to Rule 302(b) and the Staff guidance, the rule required that each signatory to an electronic filing manually sign a signature page or other document (authentication document) before or at the time of the electronic filing to authenticate, acknowledge, or otherwise adopt the signature that appears in typed form within the electronic filing. In light of the COVID-19 pandemic, the Staff, in March 2020, issued guidance that supported certain accommodations regarding authentication documents.4 The SEC then received a rulemaking petition in April 2020 requesting that the SEC permit the use of electronic signatures when executing authentication documents under Rule 302(b), which was supported by nearly 100 public companies.5 The SEC, in recognition of the widespread use of electronic signatures and technological advances in the authentication and security of such signatures, as well as the issues raised in the rulemaking petition, adopted the rule changes discussed below.
Requirements for Electronic Signatures
Amended Rule 302(b) sets forth various requirements that must be followed to use electronic signatures for SEC filings. Specifically, before a signatory initially uses an electronic signature to sign an authentication document for a particular SEC filing, the signatory must manually sign "a document attesting that the signatory agrees that the use of an electronic signature in any authentication document constitutes the legal equivalent of such individual's manual signature for purposes of authenticating the signature to any filing for which it is provided" (initial electronic signature authentication document). Once that initial manual signature is obtained, an electronic signature may be used to sign an authentication document for a SEC filing, provided that the signing process for the electronic signature must, at a minimum:
- 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; and
- Include a timestamp to record the date and time of the signature.
The other requirements of Rule 302(b) remain unchanged, including the requirement that an electronic filer retain the authentication document for a period of five years and furnish a copy of it upon request to the SEC or its staff. An electronic filer must retain the initial electronic signature authentication document for a minimum period of seven years after the date of the most recent electronically signed authentication document, and likewise must furnish a copy to the SEC or its staff upon request.
Regarding the initial electronic signature authentication document, we believe the following language is sufficient to satisfy the requirements of Rule 302(b), as amended:
The undersigned signatory attests and agrees that the use of an electronic signature in any authentication document that includes the undersigned signatory's typed, conformed signature, and that is filed with or furnished to the Securities and Exchange Commission by or on behalf of the undersigned signatory, [COMPANY NAME] or any of its affiliates, constitutes the legal equivalent of the undersigned signatory's manual signature for purposes of authenticating the undersigned signatory's signature to any filing or submission for which it is provided.
The SEC's amendments provide a welcome efficiency to the SEC's signature requirements. The amended rules pave the way for issuers to use electronic signature platforms and other electronic methods for collecting electronic signatures when filing registration statements, current and periodic reports, Section 16 reports, beneficial ownership reports, and other documents with the SEC.
1 Release Nos. 33-10889; 34-90441; 39-2534; IC-34096, Electronic Signatures in Regulation S-T Rule 302 (Nov. 17, 2020), available at https://www.sec.gov/rules/final/2020/33-10889.pdf.
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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