This post was updated on August 16, 2017, and September 12, 2017, to include the eleventh and twelfth FAQs, respectively.
1. What are the new rules on exhibit hyperlinks generally?
On March 1, 2017, the SEC voted to adopt new rules and form amendments to make it easier for investors and other market participants to find and access exhibits in registration statements and periodic reports. The amendments will require registrants to include a hyperlink to each exhibit in the filing’s exhibit index. Currently, someone seeking to retrieve and access an exhibit that has been incorporated by reference must review the exhibit index to determine the filing in which the exhibit is included, and then must search through the registrant’s filings to locate the relevant filing.
The amendments require registrants that file registration statements or reports subject to the exhibit requirements under Item 601 of Regulation S-K, or that file Forms F-10 or 20-F, to include a hyperlink to each exhibit listed in the exhibit index of these filings, and to submit such registration statements and reports on EDGAR in HyperText Markup Language (HTML) format.
2. What forms are covered by the new rules?
The amendments apply to SEC forms for which exhibits are required under Item 601 of Regulation S-K, which in practice includes most forms. These forms include Forms S-1, S-3, S-4, S-8, S-11, SF-1, SF-3, F-1, F-3 and F-4 under the Securities Act of 1933 and Forms 10, 10-K, 10-Q, 8-K and 10-D under the Securities Exchange Act of 1934. Similarly, Forms F-10 and 20-F must include hyperlinks for their exhibit indexes. The SEC did not extend the hyperlink requirements to other forms under the multi-jurisdictional disclosure system (MJDS) used by certain Canadian issuers or to Form 6-K used by foreign private issuers.
3. Which exhibits must be hyperlinked?
All exhibits in a registration statement or report must be hyperlinked, except the following:
- XBRL exhibits;
- Exhibits that are filed with Form ABS-EE (applies to asset-backed issuers); and
- Exhibits filed in paper pursuant to a temporary or continuing hardship exemption under Rules 201 or 202 of Regulation S-T, or pursuant to Rule 311 of Regulation S-T.
The amendments do not require exhibits that were appropriately filed in paper format, including organizational documents, to be re-filed electronically. However, footnote 58 in the SEC’s adopting release notes that in a random sample of 146 Form 10-K filings made from October 1, 2015 to September 30, 2016, the charter and by-laws in the sample were all filed electronically.
4. What are the compliance dates?
Large accelerated filers and accelerated filers must comply with the final rules for filings submitted on or after September 1, 2017. The SEC’s adopting release states, “However, we encourage early compliance with the new filing requirements.”
Non-accelerated filers and smaller reporting companies that submit filings in ASCII will not have to comply with the final rules until September 1, 2018, which is intended to help mitigate some of the cost burden for these filers related to switching over to the HTML format.
5. How do the new rules apply to registration statements?
Registrants will be required to include exhibit hyperlinks in the initial registration statement and each subsequent pre-effective amendment. However, this new hyperlink obligation should not impact (or accelerate the filing of) an exhibit that is not ready to be filed and designated “to be filed by amendment.”
6. How will we hyperlink to an exhibit that is filed for the first time when no web address will be available for that exhibit before the filing is made?
The SEC’s adopting release addresses this issue and says that EDGAR can include a link to an exhibit that is filed with a registration statement or report. The term “hyperlinks” is used in the adopting release more generically to include, in addition to links to a previously filed exhibit that is being incorporated by reference into a registration statement or report, links from a registration statement or report to an exhibit that is being filed at the same time. The SEC will be issuing an updated EDGAR Filer Manual that will describe the procedures needed to create a hyperlink to an exhibit that the registrant previously filed with a registration statement or report and the procedures needed to create a link to an exhibit that is being filed at the same time as the registration statement or report. We understand from discussions with SEC Staff that the EDGAR Filer Manual should be released sometime in May 2017, though no assurances can be given.
7. Can we choose to hyperlink to external websites?
No. The adopting release reminds registrants that EDGAR does not accept documents containing web addresses that hyperlink to external websites. Specifically, the SEC’s adopting release states, “In light of the fact that many of the liability issues identified by commenters appear most relevant for hyperlinks to external websites, we do not believe that a reexamination of the liability treatment of hyperlinks is warranted at this time. However, as we continue to consider the expanded use of hyperlinks in Commission filings, we will bear these considerations in mind.”
8. How will the exhibit index look after the exhibits are hyperlinked?
Although the specific details and procedures have not been released yet in the form of the new EDGAR Filer Manual, we understand from SEC Staff discussions that the exhibit index will have blue “clickable” hyperlinks. For example, with respect to a registrant’s exhibit 3.1 certificate of incorporation, the “Certificate of Incorporation” in the exhibit index will be a blue clickable hyperlink.
9. What happens if there is an error in the hyperlink?
In response to the concerns of several commenters regarding the means to correct inaccurate exhibit hyperlinks, the SEC added an instruction to Rule 105 of Regulation S-T stating that a registrant must correct a nonfunctioning hyperlink or hyperlink to the wrong exhibit by filing, in the case of a registration statement that is not yet effective, a pre-effective amendment to such registration statement, or in the case of a registration statement that is effective or an Exchange Act report, in the next Exchange Act periodic report that requires, or includes, an exhibit pursuant to Item 601 of Regulation S-K (or in the case of a foreign private issuer, pursuant to Form 20-F or Form F-10). Once the registration statement is effective, the registrant may alternatively correct the inaccurate hyperlink by filing a post-effective amendment to the registration statement. Importantly, the SEC noted that where a filing contains an inaccurate exhibit hyperlink, the inaccurate hyperlink alone would not render the filing materially deficient, nor affect a registrant’s eligibility to use short-form registration statements.
10. What should companies be doing now?
We suggest taking the following actions to help prepare for the upcoming compliance date:
- Take an inventory of your most recent 10-K exhibit index to (1) assess if your exhibit index is up-to-date, and (2) confirm that all incorporation by reference citations are correct.
- Coordinate with your EDGAR filing agent or software provider to determine the necessary mechanics of placing the hyperlinks in an exhibit index.
- Determine whether you will want to early adopt in order to get corporate governance “credit” for an investor-friendly tool. (Timing of how soon a company can early adopt also depends on the release on the new EDGAR Filer Manual with the hyperlink procedures.)
- Consider disclosure controls and procedures for the hyperlinking process.
11. How does one link to an exhibit in a 30-year old registration statement that was filed as one gigantic ASCII file? The only available “link” would be to the whole file.
Based on recent informal Staff discussions relating to this question, we were instructed that the filer should hyperlink to the ASCII filing containing the exhibit and clearly identify the hyperlinked exhibit from the ASCII filing. By way of example, the hyperlink description could look something like this:
- 3.1 Articles of Incorporation (see exhibit 3.1 to Form S-1 Registration Statement filed with the SEC on XX XX, XXX)
Alternatively, the registrant could voluntarily choose to re-file the old exhibit with the present filing.
12. Where should we put the exhibit index now? Can we combine the list of exhibits and the exhibit index?
In connection with the SEC’s March 2017 amendments implementing the hyperlink requirement, the SEC also amended the rules pertaining to placement of exhibit index, which had previously required the exhibit index to “precede immediately the exhibits filed with such registration statement.” As amended, Rule 102(d) of Regulation S-T and Rule 601(a)(2) of Regulation S-K now require the exhibit index to “appear before the required signatures in the registrant statement or report.” Although exhibit index practice has varied, there is some ambiguity as to whether the new rules require a separate exhibit index before the signature page and the exhibits themselves. For example, while some companies are combining the exhibit table with the exhibit index and placing the latter before the signature page, others have been retaining a separate exhibit table and exhibit index and move the latter above the signatures.
As a result of this ambiguity and variance in practice, we reached out to the SEC staff to get interpretive guidance on how the list of exhibits (including the exhibit index) should now be presented in registration statements and reports. According to the SEC Staff in the Office of Chief Counsel, it is permissible to combine the exhibit table with the exhibit index and only present one list of exhibits with hyperlinks, and a separate exhibit index is not required. I think this is a good, practicable outcome and should dispense with the notion of having two lists of exhibits.
Click here to view an example of the approach applied on an 8-K.