On November 17, 2020, the SEC voted to approve new rules and rule amendments that will: (1) provide greater flexibility regarding documents filed with the SEC by authorizing the use of electronic signatures in authentication documents and; (2) facilitate electronic service and filing in the SEC’s administrative proceedings. The new rules and amendments are part of a series of measures taken by the SEC that are designed to strengthen and modernize the agency’s operations. The changes to signature requirements are specifically the result of difficulties encountered by filers with obtaining signatures during the COVID-19 pandemic. Electronic signature technology has advanced such that confidence in an electronic signature is equatable to a manual signature.
First Action
The SEC approved rule amendments to allow the use of electronic signatures when executing authentication documents in connection to many documents filed with the SEC. Rule 302(b) of Regulation S-T currently requires that each person signing an electronic filing manually sign a signature page or other document (“authentication document”) prior to or at the time of the electronic filing to authenticate the signature that appears in typed form within the electronic filing. The new amendments authorize signers of electronic filings who follow certain procedures to sign an authentication document with an electronic signature that satisfies certain requirements detailed in the EDGAR Filer Manual.
Specifically, the SEC is defining new requirements for the electronic signature signing process in the EDGAR Filer Manual, which declare that when a signatory signs an authentication document using an electronic signature, the signing process 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
- Include a timestamp to record the date and time of the signature
Additionally, the SEC has revised particular rules and forms under the Securities Act, Exchange Act, and Investment Company Act to permit the use of electronic signatures in authentication documents related to certain other filings when these filings contain typed signatures instead of manual signatures. These amendments acknowledge the broad use of electronic signatures and technological developments in the authentication and security of electronic signatures, as well as the ongoing need to support remote workforces and follow a rulemaking petition joined by nearly 100 public companies.
The new rule amendments will be effective following publication in the Federal Register.
Second Action
The SEC has adopted rule amendments making electronic filing and service of documents compulsory in administrative proceedings. The modifications also require revising sensitive personal data from many of these documents prior to filing with the SEC. The rule revisions will be in effect 30 days following publication in the Federal Register. Compliance will be enforced beginning April 12, 2021 and there will be an initial 90-day phase-in period following the compliance date.
Sources:
SEC Adopts Rules to Facilitate Electronic Submission of Documents to the Agency (sec.gov)
Electronic Signatures in Regulation S-T Rule 302 (sec.gov)
Amendments to the Commission’s Rules of Practice (sec.gov)
