Attorneys from leading Silicon Valley law firms have called on the SEC to allow companies to use electronic signatures in their filings with the agency – particularly in the context of the Covid-19 pandemic.
The SEC staff last month issued a statement noting that the agency has received inquiries about the authentication-document retention requirements under Rule 302(b) of Regulation S-T – which governs the electronic filing of documents with the SEC – due to health and other logistical issues raised by the outbreak.
Rule 302(b) requires that those signing 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.’ In the March 24 statement, SEC officials said they expect to see best efforts at compliance with the rule but also gave some relief based on the challenges Covid-19 poses.
In their rulemaking petition, lawyers from Cooley, Fenwick & West and Wilson Sonsini Goodrich & Rosati – who used e-signatures in the letter – acknowledge the March 24 statement and welcome the added flexibility it offers but press for greater and more formal change. They urge the commission to amend rules 11 and 302 under Regulation S-T to allow the use of electronic signatures as well as manual ones.
‘We believe… and many of our clients have also informed us, that obtaining and retaining manual signatures in compliance with the staff statement remains a significant logistical burden,’ the attorneys write. ‘We and many of our clients believe the staff statement could be of greater effectiveness to registrants, with no compromise to the integrity of the document-signing process, if registrants were permitted to use existing, proven electronic-signature processes with respect to filing documents with the commission.’
They argue that improvements in electronic-signature software technology make it possible to confirm who has signed a document, and when, with at least the same level of confidence as applies to manual signatures. The technology also improves recordkeeping and storage of such signatures, they say.
The lawyers note that companies already use e-signatures to complete tasks such as obtaining written consent from their board of directors, agreeing major M&A transactions and underwriting agreements.
‘Our clients have indicated to us that the current Covid-19 situation has only accelerated these trends and significantly increased the difficulties associated with obtaining manual wet signatures,’ the attorneys write. ‘Moreover, we believe the massive transition to remote and disparate work environments during these unprecedented times will increase the business trends we were already witnessing and change the way commerce is conducted toward more virtual interactions, including executing transactions and agreements.’
They add that allowing the use of e-signatures in addition to manual ones under Rule 302 would benefit both large companies with operations and employees in various locations and smaller companies with limited resources that find it difficult to have documents signed manually and collected quickly from remote locations.