Defining Issues | November 2020

 

Insight

SEC allows for electronic signatures and submissions

Rule amendments provide flexibility by permitting the use of electronic signatures in authentication documents.

The new amendments revise existing Rule 302(b) in Regulation S-T, which requires a manual signature on an authentication document each time an electronic signature is filed with the SEC, instead allowing the authentication document to be signed using an electronic process.

Applicability

SEC Release Nos. 33-10889; 34-90441; 39-2534; IC-34096

  • Public companies, including registered investment companies and registered investment advisers

SEC Release Nos. 34-90442; File No. S7-19-15

  • Persons involved in SEC administrative proceedings

Relevant dates

  • Amendments related to electronic signatures – Effective upon publication in the Federal Register. However, the SEC staff have stated that they would not recommend enforcement action if companies complied with the requirements of the amended rules in advance of that publication date.
  • Amendments related to the electronic filing and service of documents in administrative proceedings – Effective 30 days after publication in the Federal Register. Compliance required beginning April 12, 2021, with a 90-day phase-in period ending July 12, 2021.

Key impacts

Under the amended rules, an authentication document may be signed using an electronic process meeting the minimum requirements outlined in a revised EDGAR Filer Manual.

Requirements for electronic signature process

For companies that elect to use an electronic signature process for authentication documents, the following requirements apply:

  • The electronically signed authentication document must be retained for five years and furnished upon request of the SEC (this is not a change from existing requirements).
  • Prior to initial use of an electronic signature, each individual must manually sign a document agreeing that their electronic signature is the legal equivalent of their manual signature. This manually signed document must be retained for as long as the individual may use an electronic signature, but at a minimum, for 7 years after the date of the most recent electronic signature (this is a new requirement).

Manually signed documents may be retained and stored via electronic means.

In addition to the amendments to Rule 302(b) of Regulation S-T, the SEC amended certain rules and forms in the Securities Act, Exchange Act, and Investment Company Act that currently require a manual signature. These amendments allow for the use of electronic signatures, using a similar framework to that outlined above for Rule 302(b).

Additional amendments

In a second action, the SEC also adopted rule amendments to require electronic filing and service of documents in administrative proceedings. These amendments to the SEC’s Rules of Practice were originally proposed in 2015. After consideration of comments received, the proposed rules were adopted with revisions to clarify certain definitions and requirements related to information that must be redacted.

Compliance with these requirements will be required starting April 12, 2021.  During a 90-day phase-in period, submission will be required both electronically, using the Electronic Filings in Administrative Proceedings (eFAP) system and in either paper format or by email. On July 12, 2021, the electronic submission only will be required.


As a reminder, the SEC staff issued a statement in June 2020 that offered measures registrants may take to comply with requirements related to obtaining and retaining manual signatures in light of logistical or other issues caused by the spread of COVID-19. That statement was temporary, but remains in effect until public notice is provided that it is no longer in effect.

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