The Staff of the various Securities Exchange Commission (SEC) divisions, including the Division of Corporation Finance, issued an announcement on March 24, 2020, which provides some flexibility to registrants seeking to satisfy the record retention requirement in Rule 302(b) of Regulation S-T that the registrant retain the manually signed documents.
Rule 302(b) of Regulation S-T requires that each signatory to documents electronically filed with the SEC “manually sign a signature page or other document authenticating, acknowledging or otherwise adopting his or her signature that appears in typed form within the electronic filing.” Such documents must be executed before or at the time the electronic filing is made. Further, electronic filers must retain such documents for a period of five years and furnish copies to the SEC or its staff upon request.
While the Staff’s announcement states that they expect all persons and entities subject to Regulation S-T to comply with the requirements of Rule 302(b) to the fullest extent practicable based on their particular facts and circumstances, the Staff understands that some persons and entities subject to Regulation S-T may experience difficulties satisfying these requirements due to circumstances arising from COVID-19.
In light of these difficulties, the announcement provides that the Staff will not recommend the SEC take enforcement action with respect to the requirements of Rule 302(b) if the following are true:
- A signatory retains a manually signed signature page or other document authenticating, acknowledging, or otherwise adopting his or her signature that appears in a typed form within the electronic filing and provides such document, as promptly as reasonably practicable, to the filer for retention in the ordinary course according to Rule 302(b) (For example, if a signatory is teleworking, the signatory could execute a hard copy of the signature page remotely and hold that page for delivery to the filer upon his or her return to the place of work).
- Such document indicates the date and time when the signature was executed.
- The filer establishes and maintains policies and procedures governing this process.
The Staff also says the signatory may provide to the filer an electronic record (such as a photograph or pdf) of such a document when it is signed.
The announcement also reminds registrants and signatories of the presumption within Section 6 of the Securities Act that a signature is validly authorized, and the Staff expects filers subject to Regulation S-T to maintain procedures to ensure that any typed signature in an electronic filing is affixed with the authority of the signatory.
While this record retention relief is welcomed by registrants and practitioners, it stops short of offering maximum flexibility to registrants by saying that a “manual signature” can be satisfied through the usual board portal procedure that provides for authorization of a director’s electronic signature on the signature page of an Exchange Act report or Securities Act registration statement. We understand practice is mixed in this regard, with some practitioners relying on past verbal comfort from the Staff that using board software packages to execute SEC filings satisfied the “manual signature” requirement.
Given the widely accepted usage of online director resources and e-sign capabilities in legal documents, as well as the COVID-19 concerns (including a news report that the virus might be able to linger for 17 days), we hope the SEC and its Staff consider offering this next step of relief, which we believe would be much more practical given today’s environment and technologies.
If you have any questions regarding any of the topics covered in this blog post, please feel free to contact a member of our Corporate & Securities practice group or, if applicable, contact your primary Bass, Berry & Sims relationship attorney.
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