Thought Leadership

SEC to Allow Electronic Signatures in Filings

Client Updates

On November 17, 2020, the Securities and Exchange Commission adopted amendments to Rule 302(b) of Regulation S-T, expressly permitting the use of electronic signatures to documents filed via EDGAR, subject to certain requirements. As the SEC noted, these amendments provide additional flexibility with respect to some of the burdens of requiring manual signatures, which have been exacerbated during the current work from home environment.

These amendments will become effective when published in the Federal Register, however, the Staff of the Division of Corporation Finance stated that it will not recommend enforcement prior to effectiveness so long as all the requirements in the amended Rule 302(b) are met.
 

Separately, the Staff issued temporary relief to the authentication document retention requirements in response to the challenges caused by COVID-19.

 

Requirements for Electronic Signatures

Rule 302(b) currently requires signatories to manually sign a signature page or other document (an “authentication document”) when submitting an electronic filing. The filer must retain the signed authentication document for five years. Amended Rule 302(b) allows a signatory to electronically sign an authentication document as long as certain requirements set forth in the EDGAR Filer Manual are met. The SEC updated its EDGAR Filer Manual to provide that the updated signing process must:

  • Require the signatory to present a physical, logical or digital credential in order to authenticate the signatory’s individual identity;

    • Some examples of an authentication credential are a driver’s license or other identification document (physical), passcode (digital) or a credential chip located on an employer-issued badge (logical).

  • Reasonably provide for non-repudiation of the signature;

    • Non-repudiation is typically provided by the e-signature platform and usually combines a digital signature with a public key encryption.

  • 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.

 

To use an electronic signature under the amended Rule 302(b), the signatory must first manually sign a document attesting that the use of an electronic signature used in any authentication document constitutes the legal equivalent of the signatory’s manual signature. The filer must retain a hard copy of the signatory’s manually signed attestation document for as long as that signatory uses an electronic signature and for at least seven years after the date of the most recent electronically signed authentication document.

 

Temporary Relief from Manual Signature Retention Requirements

The Staff will not recommend enforcement action with respect to the manual signature retention requirements of the amended Rule 302(b) if:

  • the signatory retains a manually signed signature page of the authentication document and promptly provides it to the filer for retention;

  • the authentication document is dated and timestamped; and

  • the filer establishes and maintains procedures governing this process.

 

Next Steps

We recommend that companies who wish to take advantage of the convenience and flexibility that electronic signatures provide should have any potential signatory manually sign an attestation document prior to their next required filing. We also recommend that companies confirm that their e-signature provider is in compliance with the requirements set forth in the amended Rule 302(b) and revised EDGAR Filer Manual. Although the definition of “electronic signature” is substantially similar in both the E-SIGN Act and the EDGAR Filer Manual, the SEC has noted that the E-SIGN Act does not apply to all the requirements related to authentication documents. “Electronic signature” is defined as “an electronic sound, symbol, or process, attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.” Therefore, any signing process that meets the requirements of the E-SIGN Act (such as clicking a checkbox to sign a document) must still satisfy the requirements of the amended Rule 302(b) and revised EDGAR Filer Manual.

 

ABOUT BAKER BOTTS L.L.P.
Baker Botts is an international law firm of approximately 725 lawyers practicing throughout a network of 13 offices around the globe. Based on our experience and knowledge of our clients' industries, we are recognized as a leading firm in the energy and technology sectors. Since 1840, we have provided creative and effective legal solutions for our clients while demonstrating an unrelenting commitment to excellence. For more information, please visit bakerbotts.com.

Related Professionals