November 23, 2020

Reg S-T: Staff Allows Early “Electronic Signature” Compliance

On Friday, the Corp Fin Staff updated its statement on use of electronic signatures in light of Covid-19 concerns to say that it would not recommend enforcement action with respect to Reg S-T signature requirements for companies that comply with amended Rule 302(b) in advance of the effective date.

As I blogged back in June, the statement also extends for an indefinite time the temporary “Covid-19” signature relief that allows signatories to retain manually signed pages and deliver them to the company for retention as soon as reasonably practicable.

Dates for Electronic Signatures: Controlling for “Time Stamps”

Following last week’s amendments to Reg S-T, a member asked this question on our Q&A Forum (#10,514):

If an officer decides to authenticate his/her signature electronically (once the new rule goes into effect) via DocuSign and does so a day or two in advance of an electronic filing with the SEC, should the signature page filed with the SEC bear the date that matches that date/time stamp or can it still bear the date of the filing?

John responded:

I don’t think there’s ever been a hard and fast rule regarding the date of an individual’s signature on a 10-K or 10-Q filing. Rule 302 of S-T simply requires (as it always has) that the authentication document “shall be executed before or at the time the electronic filing is made.” That being said, I think the more common practice is to date the signature page the date of the filing, and I think that’s a better practice in this situation.

The reason I say that is that the filing speaks as of its date, and the officer’s responsibility for the accuracy of its contents does not end prior to the time that the document is filed. While obtaining signatures (electronically or otherwise) a few days in advance may be a matter of convenience, I think the company’s procedures should make it clear that a signatory’s responsibility for the filing do not end on the date that he or she has authenticated their signature, and that the signature in the filing will be dated as of the filing date.

I think the potential problem with not taking this approach can be illustrated by a situation in which the company obtains an officer’s signature a few days in advance of filing the 10-Q, but during the interim, there is a development that requires a subsequent event footnote. Now the company would find itself in a situation in which the officer has signed a document as of a date that precedes the date of a specific disclosure included in the document. I think a situation like that may well implicate the company’s disclosure controls and procedures unless it is clear from its policies that the signatories understand as of what date their signatures speak, and that their responsibility for the accuracy and completeness of the filing do not end with the date they sign it.

Auditor Independence: PCAOB Amends Standards to Align with SEC

Last week, the PCAOB announced it had adopted amendments to its independence standards to align the Board’s requirements with the SEC’s recent revisions to auditor independence rules. The PCAOB rules will be effective subject to SEC review.

Liz Dunshee