SEC Allows Electronic Signatures for Forms 3, 4, and 5

January 04, 2021

Although Section 16 forms have been filed via EDGAR since 2002, until now, it has been necessary for insiders (or their attorneys-in-fact) to put pen to paper and manually sign a copy of each filing. This manually signed copy had to be retained in paper format for five years.

Compliance with this requirement was challenging when the signatory was not in the same physical location as the person preparing the filing. Remote working arrangements in response to the COVID pandemic only served to highlight the difficulties of obtaining manual signatures and retaining the paper copies. Earlier in 2020, the SEC issued a statement allowing the manual signature to be obtained after the form is filed (see “Section 16 Filings and COVID Relief”). Now the SEC has eliminated the need for a manual signature altogether.

Manual Signature No Longer Required

Effective December 4, 2020, it is no longer necessary to manually sign Forms 3, 4, and 5. Under an amendment to Rule 16a-3(i), Section 16 insiders are permitted to sign their reports electronically (e.g., using DocuSign). Likewise, whether signed manually or electronically, the signed copy can be retained electronically (the signed copy still must be retained for five years).

Signature Still Required

This doesn’t mean that you can just type the insider’s name in the signature field and be done with it. The insider, or attorney-in-fact, still needs to sign the form, it’s just that now, that signature can be obtained electronically, and the signed copy of the filing can be retained in digital form.

The method used to electronically sign the filing must do the following:

  • Authenticate the signatory’s identity.
  • Reasonably provide for non-repudiation of the signature.
  • Attach, affix, or otherwise logically associate the signature with the copy of the filing.
  • Include a timestamp to record the date and time of the signature.

Authorization Required

Before signatories can utilize electronic signatures for Section 16 filings, they must manually sign a consent agreeing that their electronic signature will constitute the legal equivalent of a manual signature. The consent must be retained (in paper or electronic form) for at least seven years after the date of the most recent report the signatory signed electronically.

No Relief for Form ID

The amendments do not affect the process for filing and authenticating a Form ID. Thus, Form ID still requires a manual signature and still must be notarized.