TheCorporateCounsel.net

Back at the beginning of the 2023 proxy season, new SEC rules went into effect to require the furnishing of a PDF of the company’s Rule 14a-3 annual report via the EDGAR system under the header submission type “ARS,” replacing a requirement to send hard copies of the annual report to the SEC (which the Staff had thankfully deemed satisfied by posting the annual report on the company’s website). Perhaps given the timing of this new requirement, the implementation was a bit rocky last proxy season, and questions continue to persist. The 2024 Annual Meeting Handbook published by Latham and DFIN describes the requirement as follows:

In 2022, the SEC adopted amendments to Rule 101 of Regulation S-T that mandate the electronic submission of annual reports to shareholders in .pdf format on “EDGAR,” the SEC’s Electronic Data Gathering, Analysis, and Retrieval system. Effective from January 2023, the amended rule applies to both standalone “glossy” annual reports and annual reports that use the “10-K wrap” approach, under which several “glossy” pages — such as a cover page and a letter to shareholders — are wrapped around the Form 10-K. The annual report should be filed on EDGAR as an “ARS” filing. The ARS submission is due no later than the date on which the annual report is first sent or given to shareholders. The amendments replace the previous requirement that such reports be furnished in paper form to the SEC or on a company’s corporate website. While publishing the annual report on a company’s corporate website is now optional under the amended rules, companies are still required to post a copy of the annual report to a website other than EDGAR pursuant to Rule 14a-16(b) of the Exchange Act.

For the 2024 proxy season, companies should now have factored the ARS submission into their proxy filing and annual meeting timeline. The PDF that is submitted as the ARS is usually filed right after the DEF 14A has been filed. These days, many companies use the “Form 10-K Wrap” approach to the annual report, where the additional Rule 14a-3 requirements are met by appending additional pages to the Form 10-K. Unlike a Form 10-K filing, the ARS submission is not required to be tagged using XBRL. Note that the new EDGAR submission requirement does not affect anything about the delivery of the Rule 14a-3 annual report. In this regard, Rule 14a-3(b) requires that the proxy statement be “accompanied or preceded by an annual report,” and, under Rule 14a-16, the proxy statement and annual report have to both be posted online at the same time.

– Dave Lynn