SEC Amends Rules to Facilitate Electronic Submission of Documents

In light of the public health concerns and logistical challenges facing registrants due to the COVID-19 pandemic, as well as technological developments in the authentication and security of electronic signatures, the Securities and Exchange Commission (SEC) has voted to adopt amendments to Regulation S-T and the Electronic Data Gathering, Analysis and Retrieval (EDGAR) filer manual (collectively, the Amendments). The Amendments will permit the use of electronic signatures by registrants in “authentication documents,” which include signature pages to registration statements.[1]

Rule 302(b) of Regulation S-T currently requires that each signatory to an electronic filing with the SEC manually sign, and retain for a period of five years, a signature page, or other 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 (an authentication document). The Amendments are intended to promote flexibility in complying with the authentication document requirement by providing signatories with the option of signing an authentication document manually or electronically, while requiring the signing process for an electronic signature to meet certain conditions that are consistent with the evidentiary purposes of the authentication document. The updated EDGAR filer manual provides that the signing process for an electronic signature must, at a minimum:

• require the signatory to present a physical, logical or digital credential[1] that authenticates the signatory’s individual identity;
• reasonably provide for non-repudiation[2] 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 Amendments are intended to be technologically neutral and allow for different types and forms of electronic signatures. A registrant seeking to rely on the Amendments may utilize third-party electronic signature platforms, such as DocuSign or Adobe Sign, or acquire or obtain access to an electronic signature software, provided that any electronic signing process conforms to the requirements outlined above.

The existing requirements of Rule 302(b), including the requirements to retain the authentication document for a period of five years and furnish a copy of it to the SEC upon request, will remain unchanged by the Amendments.

The Amendments require that before a signatory initially uses an electronic signature to sign an authentication document, 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 the signatory’s manual signature for purposes of authenticating the signature to any filing for which it is provided (an initial authentication document). The signatory will be required to keep a copy of its initial authentication 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 signatory will be required to furnish a copy of its initial authentication document to the SEC upon request.

The Amendments also include revisions to several rules and forms under the Securities Act of 1933, as amended, Securities and Exchange Act of 1934, as amended, and Investment Company Act of 1940, as amended, to permit the use of electronic signatures in authentication documents.

The Amendments became effective on December 4, 2020.

S&K Observations

In light of technological advances, the Amendments are a long overdue update of the manual signature requirements that previously applied to filings that require signatures by an officer or director of a registrant.  The Amendments should make compliance with Regulation S-T record retention requirements easier for funds in the current environment where most personnel are working remotely.  A Fund that wishes to rely on the flexibility provided by the Amendments and use third-party electronic signature platforms should verify that such platforms comply with the requirements included in the updated EDGAR filer manual. In addition, a Fund should also consider revising or establishing and maintaining policies and procedures which address the Fund’s signing processes.

[1]              Electronic Signatures in Regulation S-T Rule 302, SEC Rel. No. IC-34096 (Nov. 17, 2020), available at https://www.sec.gov/rules/final/2020/33-10889.pdf.  The updated EDGAR filer manual is available at: https://www.sec.gov/info/edgar/specifications/edgarfm-vol2-v55.pdf.
[2]              “Credential” is defined in the EDGAR filer manual as an object or data structure exclusively possessed and controlled by an individual to assert identity and provide for authentication.
[3]           “Non-repudiation” is defined in the EDGAR filer manual as assurance that an individual cannot falsely deny having performed a particular action.