April 06, 2020 | By Patrick T. McCloskey
On March 26, 2020, the United States Securities and Exchange Commission (SEC) announced it was granting temporary relief from the notarization requirement for Form ID filers seeking access to the Electronic Data Gathering, Analysis and Retrieval (EDGAR) system, citing the effects of the COVID-19 outbreak.
In order to gain access to the EDGAR system for electronic filings, an entity or individual must complete a Form ID application online and, pursuant to Rule 10 of Regulation S-T, upload, as an attachment to the Form ID, a portable document file (pdf) that must be manually signed and notarized.
As a result of difficulties in obtaining a notarized signature while parties are teleworking during the COVID-19 outbreak, the SEC adopted, as a temporary final rule (from March 26, 2020 through July 1, 2020), a new paragraph (c) to Rule 10 of Regulation S-T that will allow access to the EDGAR system on a temporary basis without initially providing the required notarization on the manually signed document.
During the applicable period, the SEC staff will be authorized create EDGAR accounts and issue EDGAR access codes without a notarization if the applicant indicates on the face of the signed document that it could not obtain the required notarization due to circumstances related to COVID-19. Prospective filers seeking access to EDGAR without a notarization in reliance on the temporary rule may be asked to provide supplemental documents for validation purposes. Although EDGAR codes will be provided and filings with EDGAR can be commenced, the filer still must submit, as correspondence via EDGAR within 90 days, a pdf copy of the notarized manually signed document. The SEC staff can inactivate the filer’s EDGAR codes if this 90-day requirement is not complied with or if they have reason to believe a filer who has gained EDGAR access under the temporary rule has made illegitimate filings that are inconsistent with the protection of investors.
Private companies conducting their first private placement in reliance on Regulation D (under Rule 504 or Rule 506) will need EDGAR access codes in order to file a Form D, which, under Rule 503, must be filed within 15 days of the first sale. Any such issuer would need to file a Form ID and acquire the requisite EDGAR codes before making such electronic Form D filing.
Notarization requirements have been a challenge during the COVID-19 outbreak. In New York, Governor Andrew Cuomo signed an Executive Order on March 19, 2020 modifying the notarization requirements to allow audio-video technology. These modified regulations in New York are currently in place through April 18, 2020.
The SEC’s temporary final rule release also included deadline extensions for specified reports and forms that companies must file under Regulation A and Regulation Crowdfunding. Subject to certain exceptions, affected companies have an additional 45 days to file certain disclosure reports that would otherwise have been due between March 26, 2020 and May 31, 2020. Among the conditions of the extension are that the applicable company (i) promptly disclose to its investors its reliance on the temporary relief and (ii) disclose in the filed report or form that it is relying on the temporary final rule and state the reasons why, in good faith, the company could not file the report or form on a timely basis.
This blog post is for general informational purposes only and does not constitute legal advice. No one should rely on the information in this blog post without seeking appropriate legal, accounting, tax or other appropriate advice from an attorney, accountant or other professional properly licensed in the applicable jurisdiction(s).