SEC Authorizes Use of Electronic Signature in Filings as Legal Equivalent to a Manual Signature
The COVID-19 pandemic has accelerated the adoption of new technology by individuals, businesses, and government agencies. The Securities and Exchange Commission (SEC) authorized a recent rule change allowing electronic signatures to be used when executing authentication documents in connection with many documents filed with the Commission.
According to the SEC, the amendments recognize the “widespread use of electronic signatures and technological developments in the authentication and security of electronic signatures, as well as the continuing need to support remote workforces.” Nearly 100 public companies had also called for changes to the SEC’s signature requirements in an April 2020 rulemaking petition. The rulemaking petition stated, among other things, that “the current COVID-19 situation has … significantly increased the difficulties associated with obtaining manual ‘wet’ signatures.” It added that “[i]mprovements in electronic signature software technology make it possible to confirm (with at least equal confidence to the collection of manual signatures) who has signed a document and when it was signed.”
Electronic Signature Rule Amendments, Rule 302(b) and EDGAR Filer Manual
Regulation S-T, as well as the EDGAR Filer Manual, govern the electronic submission of documents filed with, or otherwise submitted to, the SEC through EDGAR. Title 17, section 232.302(b) (Rule 302(b)) currently requires that each signatory to an electronic filing manually sign a signature page or other document (referred to as an “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. An electronic filer must retain the authentication document with respect to each signatory to the electronic filing for a period of five years and must furnish a copy of it to the Commission or its staff upon request.
On November 17, 2020, the SEC approved amendments to Rule 302(b) that will permit a signatory to an electronic filing who complies with procedures to sign an authentication document through an electronic signature that meets requirements specified in the EDGAR Filer Manual. The SEC also amended rules and forms under the Securities Act, Exchange Act, and Investment Company Act to allow the use of electronic signatures in authentication documents in connection with certain other filings when these filings contain typed, rather than manual, signatures.
The amended EDGAR Filer Manual requires that, when a signatory signs an authentication document using an electronic signature, 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.
New Rule 302(b)(2) also requires that, prior to initial use of 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 such individual’s manual signature for purposes of authenticating the signature to any filing for which it is provided. An electronic filer must retain this manually signed 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.
Current requirements of Rule 302(b) are otherwise unchanged, including the requirements that an electronic filer retain the authentication document for a period of five years and furnish a copy of it upon request to the Commission or its staff.
Effect on Filers
The SEC amendments will make it easier for businesses to obtain electronic signatures when filing a wide range of documents with the agency, including registration statements, current and periodic reports, and beneficial ownership reports.
If you have any questions or if you would like to discuss these issues further, please contact Paul A. Lieberman or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
When a Child Turns 18: The Gap in Your Family’s Estate Plan
Once a child turns 18, parents lose the automatic legal authority to make medical and financial decisions on their behalf, even if the child still lives at home or remains on the family’s insurance. Three documents close that gap: a durable power of attorney, a health care proxy or directive, and a HIPAA authorization. For […]
Business Mediation: An Overview and Practical Tips
Business mediation is a confidential, voluntary process in which a neutral third party helps companies negotiate a resolution to a commercial dispute without going to trial. Because working with a mediator is very different from litigating in the courtroom, it is important to understand how commercial mediation works, when it makes sense for your dispute, […]
Top 5 Causes Leading to Construction Defect Litigation
The five most common causes of construction defect litigation are design defects, substandard materials, workmanship defects, code violations, and subsurface defects. Because these flaws can compromise a building’s integrity, functionality, or safety, they frequently lead to disputes involving multiple parties and high financial stakes. Key takeaways: What is Construction Defect Litigation? Construction litigation is complex, […]
How to Protect Your New Jersey Business When Going through a Divorce
The most effective ways to protect your business in a divorce are put in place before one begins: a prenuptial or postnuptial agreement, clean separation of business and personal finances, and divorce contingencies built into your operating or buy-sell agreements. If divorce is already underway, the priorities shift to establishing how the business is classified […]
The most common franchise disputes involve breach of contract, franchise termination and non-renewal, intellectual property rights, territorial encroachment, royalty and fee payments, franchisor support obligations, and violations of state franchise laws such as the New Jersey Franchise Practices Act. Franchisors and franchisees can often resolve these conflicts by providing written notice detailing the dispute and […]
Reputational Risk and Legal Exposure: Why New Jersey Businesses Must Manage Them Together
New Jersey businesses must manage legal and reputational risk together because modern disputes play out on two fronts at once: the legal proceeding itself and the court of public opinion, where customers, employees, investors, and business partners often reach conclusions long before a judge or jury has had the opportunity to evaluate the facts. Success […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
