New Rule Amendments Permit Electronic Signatures on SEC Filings

By James Jolley, Heyward Armstrong and Amy Batten

On November 17, 2020, the Securities and Exchange Commission (SEC) adopted rule amendments to permit immediately and post-pandemic the use of electronic signatures on documents filed with or furnished to the SEC. The amendments formally became effective upon publication in the Federal Register on December 4, 2020, but on November 20, 2020, the SEC provided guidance permitting compliance with the amended rules before their effectiveness.

Until these recent amendments, other than temporary relief discussed in our previous alert in connection with the COVID-19 pandemic, SEC rules, specifically Regulation S-T Rule 302(b), required that a person signing a document filed with or furnished to the SEC manually sign a signature page or other authentication document associated with the filing before or at the time the electronic filing is made with the SEC to authenticate the signature that appears in typed form within the electronic filing.

The recent amendments allow signatories to sign a wide variety of SEC filings electronically, including registration statements, current and periodic reports, Section 16 filings, beneficial ownership reports and other documents. In adopting these amendments, the SEC noted the widespread use of electronic signatures and technological developments in the authentication and security of electronic signatures and the difficulties with complying with the manual signature requirement, particularly in the context of the COVID-19 pandemic.

In order to electronically sign a document to be filed with the SEC, the recent amendments require the signing process to meet several conditions, including:

1. having a physical, logical or digital credential that authenticates the signatory’s individual identity;
2. reasonably providing for the non-repudiation of the signature;
3. providing that the signature be logically associated with the signature page or document being signed, which will provide the signatory with notice of the nature and substance of the document and an opportunity to review it before signing; and
4. including a timestamp to record the date and time of the signature, since Rule 302(b) continues to require that the document be signed before or at the time an electronic filing is made with the SEC.

The SEC noted that these requirements are intended to be “technologically neutral” and allow for different types and forms of electronic signatures. As a result, providing signatures by email or through a number of commercially available electronic signature providers should satisfy these requirements, if structured appropriately. Notably, the amendments do not change the requirement that filers maintain a copy of the signed signature page or other authentication document for a period of five years and furnish a copy upon request to the SEC.

Additionally, before using electronic signatures to execute documents to be filed with the SEC, the signatory must manually sign a document attesting that the signatory agrees that the use of an electronic signature for an SEC filing constitutes the legal equivalent of such individual’s manual signature. Filers must retain this initial manually signed attestation for a minimum period of seven years after the date of the most recent electronically signed signature page or other authentication document and must furnish a copy of this attestation to the SEC upon request.

To obtain this manually signed attestation, filers may consider adding language along the lines of the following in their next directors’ and officers’ questionnaires, assuming they will be manually executed by each officer and director:

I acknowledge and agree that my electronic signature on filings or submissions with the United States Securities and Exchange Commission (“SEC”) or in any authentication document to be filed with or furnished to the SEC is the legal equivalent of my manual signature, including for purposes of Regulation S-T Rule 302(b)(2). In any filings or submissions by [name of issuer] (the “Company”) with the SEC, the Company and its affiliates, acting through their respective proper officers, are authorized to attach my electronic signature in the form of “/s/ [name of undersigned]” to such SEC filings or submissions upon receipt by the Company or its affiliates of either (1) my electronic signature submitted through an electronic signature provider (e.g., DocuSign) or (2) a reply by email from the email address associated with me in the Company’s records, provided that the request for electronic signature includes a draft of such SEC filing or submission to be made by the Company (subject to any changes to such draft approved by [the principal executive officer and principal financial officer of the Company], as evidenced by such officer’s signature on the applicable SEC filing). I understand that I may not repudiate any such electronic signature that is included on a document filed with or furnished to the SEC.

                                                            By: ________________________________

                                                            Name: _____________________________

As this attestation must be provided upon request to the SEC, filers might consider including it as a separate exhibit to the directors’ and officers’ questionnaire so that it can be furnished, as executed, to the SEC without the remainder of the completed questionnaire. Filers are not required to retain original copies of the manually signed attestations, so directors and officers may return scanned copies of their attestations by email.

If you have any questions related to this alert, please do not hesitate to contact any member of the Public Companies group or your regular Smith Anderson lawyer.