Electronic Signature in SEC Filings is Legal Equivalent to a Manual Signature

SEC Authorizes Use of Electronic Signature in Filings as Legal Equivalent to a Manual Signature

Electronic Signature in SEC Filings is Legal Equivalent to a Manual Signature

Electronic Signature in SEC Filings is Legal Equivalent to a Manual Signature

<strong>SEC Authorizes Use of Electronic Signature in Filings as Legal Equivalent to a Manual Signature</strong>

Author: Paul A. Lieberman|January 6, 2021

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.

Although the rule amendments will be effective upon publication of the adopting release in the Federal Register, the staff of the Division of Corporation Finance, the Division of Investment Management, and the Division of Trading and Markets announced that they will not recommend the Commission take enforcement action with respect to the requirements of Rule 302(b) in advance of such time provided that a signatory complies with all of the requirements of amended Rule 302(b).

If you have questions, please contact us

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.

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About Author Paul A. Lieberman

Paul A. Lieberman

Paul A. Lieberman has a distinguished legal practice devoted to client-centric representation in the financial services industry, including broker-dealers, investments advisers, public and private investment companies, insurance companies, registered representatives, financial advisers, agents and associated staff.

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