SEC Adopts Rule Amendments Permitting the Use of Electronic Signatures in Electronic Filings

On November 20th, 2020, the Securities and Exchange Commission (SEC) adopted a rule intended to modernize its operations. This rule is an amendment to the existing Rule 302(b) of Regulation S-T and is intended to provide greater flexibility for SEC filings.

This is done by permitting the use of electronic signatures in authentication documents.

Furthermore, the SEC has also amended its Rules of Practice. This amendment requires that people involved with administrative proceedings file and serve any documents electronically.

As currently written, Rule 302(b) of Regulation S-T requires that all signatories involved with an electronic filing manually sign an authentication document to authenticate the signature associated with the filing in question. This authentication document must then be retained by the person filing the document for five years. If requested by the SEC, it must be furnished to the Commission.

However, the Covid-19 pandemic has made obtaining manual signatures more complicated than initially conceived. Furthermore, electronic signature technology has also improved since the formulation of the rule. Due to these factors, the amended rule now allows signatories to electronic filings to sign an authentication document via an e-signature.

Per the amendment, if a signatory wishes to sign via an e-signature, they must:

  • Present a credential that authenticates their identity. This credential can be physical, logical, or digital, as convenient.
  • Reasonably provide for non-repudiation of the signature.
  • Provide the signature be logically associated (via attachment, affixation, or other means) with the document or signature page that is being signed. Doing so will provide the signatory with an opportunity to review the document before signing, as well as notice of the nature and substance of the document being signed.
  • Include a timestamp that will record the date and timestamp of the signature. This is as SEC rules still require the document to have been signed before or at the time when the electronic filing is made with the Commission.

Additionally, before using electronic signatures in order to execute documents meant to be filed with the Commission, the signatory must first manually sign a document. This document attests that agree using their electronic signature in such a manner is the legal equivalent of using their manual signature.

The signatory must retain this attestation document for at least seven years after the most recent authentication document that has been electronically signed. They must also be able to provide it to the Commission upon request.

All other requirements associated with Rule 302(b) will remain unchanged. These include the existing conditions that the filer retains a copy of the authentication document for a period of five years after the filing, as previously mentioned.

The amendments to the SEC’s Rules of Practice include requiring service of documents and electronic filings in relation to administrative proceedings. Furthermore, they require that sensitive information be redacted from many such documents before filing with the SEC.

These amendments become effective within 30 days of the SEC’s release in the Federal Register. However, compliance is not required until April 12th, 2021. Furthermore, following this date, there will also be a 90-day phase-in period allowed for.



Posted by Lunar Pen

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