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Release No. 33-6977 Release No. 34-31905 Release No. 35-25745 Release No. 39-2300 Release No. IC-19283 58 Fed. Reg. 14683 - March 18, 1993 February 23, 1993
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 Table of Contents
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I. EXECUTIVE SUMMARY
On April 26, 1993, mandated electronic filing is scheduled to commence for Transitional Filers and selected volunteers, including specified third party filings with respect to such registrants. Phase-in of all domestic registrants is expected to be completed by mid-1996.
To implement the EDGAR system, the Commission published for comment proposed new rules and revisions to certain existing rules and forms, as well as a proposed phase-in schedule of registrants, in summer 1992. 26 The proposals were designed to mandate and accommodate submissions in electronic format, as well as to update current rules to take advantage of the efficiencies of electronic submission and processing. 27 Electronic filing will result in a number of benefits to filers, the Commission, investors and other members of the public. 28
The Commission received 53 letters of comment from a variety of corporations, professional associations, securities firms, and self-regulatory organizations. 29 Of these commenters, 11 were EDGAR Pilot filers (and are Transitional Filers). In general, commenters supported the concept of electronic filing. Most of the commenters offered suggestions for modification of the proposals to provide efficiencies and cost savings to public companies and provide reasonable benefits to the public as well as the staff. Many commenters focused on the treatment of exhibits and annual reports to security holders in the operational EDGAR system. A number of changes have been made in response to these comments.
Electronic submissions will be governed principally by Regulation S-T, which contains rules prescribing requirements and procedures relating to electronic submissions. Regulation S-T is complemented by amendments to certain existing regulations and forms, including Regulation C 30 and Form 10-K. 31 In a change from the proposed rules, however, specific changes applicable to electronic filers have been grouped in Regulation S-T, similar to the aggregation of disclosure rules in Regulation S-K, to the extent practicable. In connection with the new electronic filing rules and amendments, electronic filers should consult the EDGAR Filer Manual, which provides details on technical formatting requirements for electronic submissions. The most recent version of the EDGAR Filer Manual was disseminated in June 1992. It is anticipated that an updated version of the EDGAR Filer Manual will be issued in March 1993, after adoption by the Commission. 32
The rules provide that, with specified exemptions, all Commission filings by or with respect to phased-in registrants must be in electronic format. Circumstances involving both paper and electronic filers, such as business combinations, are specifically addressed. Electronic filers that obtain an exemption from the provisions of Regulation S-T for specified submissions 33 and filers that are not phased in will file in paper in accordance with existing provisions of the Commissions regulations and forms.
Under Regulation S-T, exhibits filed in paper before the filer becomes subject to mandated filing will not have to be refiled in electronic format. Once the filer becomes subject to mandated filing, any new exhibits will have to be filed electronically. In a change from the proposals, where an electronic amendment is filed to an exhibit previously filed in paper, only the amendment will be required in electronic format; the previously filed paper exhibit to which the amendment relates will not have to be refiled electronically, except for the articles of incorporation and by-laws of the registrant.
Magnetic tapes and diskettes will be received, as proposed, during the Commissions current hours for receipt of paper filings, namely, 8:00 a.m. to 5:30 p.m. Eastern Time. In contrast, direct transmission filers will be permitted to transmit until 10:00 p.m. Eastern Time, but any direct transmission filing that commences after 5:30 p.m. Eastern Time, if accepted, will be considered filed as of the next business day. A direct transmission filing commencing on or before 5:30 p.m. Eastern Time, if accepted, will be considered filed on that business day. Under the proposal, Schedules 13D and certain cash tender offer filings would have been considered filed on that business day only if accepted by 5:30 p.m. Eastern Time. In light of comments received, however, this requirement has been eliminated from the rules adopted today.
Under EDGAR, required signatures will be submitted in typed form, as proposed. This approach eliminates the practical problems associated with personal identification numbers (PINs) used in the EDGAR Pilot. Signature requirements for electronic filings remain the same as for paper format documents in all other respects. In a change from the proposals, however, filers must retain a manually signed signature page or other document authenticating, acknowledging or otherwise adopting the signatures that appear in typed form within an electronic filing, to be made available to the Commission or its staff upon request for a period of five years.
The EDGAR rules include a safe harbor against liability for errors in, or omissions from, documents in electronic format 34 resulting solely from electronic transmission errors beyond the control of the electronic filer. The safe harbor has been modified from the proposals to require the electronic filer to take corrective action as soon as reasonably practicable after becoming aware of the error or omission.
Two hardship exemptions have been adopted that would permit a filing or other submission to be made in paper rather than electronic format. First, a temporary exemption will be available to electronic filers, generally for unanticipated technical difficulties in submitting an electronic document. Under the exemption, the filing may be made in paper, but then must be followed by an electronic copy so that the electronic database will be complete. Unlike the proposal, which required that a request for a temporary hardship exemption be acted upon by the staff, the temporary hardship exemption has been restructured so that an electronic filer may obtain an automatic exemption simply by filing the subject document in paper under cover of new Form TH, Notification of Reliance on Temporary Hardship Exemption. No staff involvement is required. Second, a continuing exemption will be available to electronic filers under limited circumstances for a specific filing or group of filings. Unlike the temporary hardship exemption, the staff must act upon a written application for a continuing hardship exemption. If the exemption is granted, a submission may be made in paper, with no requirement for a subsequent electronic copy in most cases. In addition to the two hardship exemptions, the rules, as proposed, permit an electronic filer to request an adjustment of the filing date of an electronic document when the electronic filer encounters technical problems beyond its control which prevents electronic submission by the due date specified by the applicable form or rule.
Because of difficulties associated with sending and displaying graphic and image material in electronic submissions, the proposed rules provided that neither paper nor electronic filers would be required to submit copies of their annual reports to security holders, which often contain such material, for the information of the Commission, if their Form 10-K reports included all information required by the proxy rules to be included in the annual report to securityholders. Upon reconsideration of the value of the annual report to security holders to the public and the staff, the Commission has determined to retain the requirement that registrants submit copies of this document to the Commission for its information. These copies would continue to be furnished in paper, unless a phased-in registrant opted to use electronic format. In response to comment, the proposed treatment of information incorporated by reference from an annual report to security holders into a filing also has been modified. Only those portions that are incorporated by reference must be filed electronically, rather than the entire annual report, as proposed.
Rules regarding disclosure concerning graphic and image information in electronic submissions have been adopted substantially as proposed. The rules provide that an appendix to the electronic format document must list all graphic and image information appearing in the paper format document and provide a fair and accurate narrative description of such information. If, however, the substantive information conveyed by the graphic and image information presented in the paper format document is described narratively in the body of the document, the appendix to the electronic format document listing the graphic and image information will simply contain a cross-reference to the narrative discussion. In response to comment, a safe harbor provision for the narrative description of the material contained in the electronic filing has been adopted.
Under Regulation S-T, a modular submission procedure has been provided, as proposed. Information intended to become part of more than one filed document, such as financial statements, could be submitted electronically one time, retained as non-public information on EDGAR, and subsequently included, at the filers direction, in as many filings as the filer designated.
A similar feature that could be used to submit information on the EDGAR system for subsequent inclusion in an electronic filing is segmented filing. Various segments of a document to be filed with the Commission could be submitted to the EDGAR non-public data storage area up to six days in advance of the anticipated filing date. On the anticipated filing date, the electronic filer then would submit a master segment instructing EDGAR to assemble the desired filing from the previously submitted segments and file it. Unlike modules, segments may be used only once. Neither modular submissions nor segments will be deemed filed or subject to liability under the federal securities laws until the filer includes the information in an electronic filing.
As required by the Securities and Exchange Commission Authorization Act of 1987 (EDGAR Authorization Act), 35 the rules, as proposed, require all electronic filers, including Transitional Filers, to submit copies of electronic filings to the Commission in paper format for a one-year period or for such shorter period of time that the Commission determines is appropriate. Although the Commission is constrained by this requirement, it may be able to shorten the period if it determines that statutory conditions are satisfied. 36
Rules requiring electronic registrants to submit Financial Data Schedules similar to those used in the EDGAR Pilot have been adopted with a deferred effective date in order to permit adequate time for system programming. 37 The Schedules include specified financial data extracted from the financial statements, schedules and disclosures pursuant to industry guides, placed in formatted schedules and identified with special tags to facilitate retrieval of the information by EDGAR. This will enable the EDGAR system to perform numerous functions with the data automatically, such as the calculation of financial ratios or the identification of companies with certain financial characteristics. In response to commenters concerns, a number of modifications have been made to the Schedules in order to facilitate their preparation. Further comment is solicited on the revised requirement.
Several minor changes that affect paper filers as well as electronic filers have been adopted as proposed. 38 For example, registrants will submit amendments to Exchange Act filings under cover of the form amended rather than filing such amendments under cover of Form 8. 39 Registrants will designate amendments by adding the letter A after the form title, e.g., Form 10-K/A. With respect to amendments to Exchange Act filings, registrants and third-party filers will have to file complete disclosure items as amended, rather than only revised words or lines. As another example, a new cover page will be required to be filed by paper and electronic filers with proxy and information statements; the cover page will identify the nature of the filings and set forth fee information.
While the Commission is adopting today requirements to furnish a Financial Data Schedule, any interested persons wishing to submit comments on the Financial Data Schedule provisions are requested to do so by , 1993 [60 days after date of publication in the Federal Register]. Persons submitting written comments should file three copies thereof with Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 5th Street, N.W., Washington, D.C. 20549. Comment letters should refer to File No. S7-6-93. All comments received will be available for public inspection and copying in the Commissions Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549.
II. BACKGROUND
A. EDGAR Pilot System
Development of an electronic disclosure system was undertaken by the Commission in 1983, and construction of a pilot system (EDGAR Pilot) to develop and test an electronic system was commenced in May 1984. The first filings were received in the EDGAR Pilot on September 24, 1984, and through the closing of the Pilot, the Commission received over 116,000 electronic filings from over 1800 filers. 40 Under the EDGAR Pilot, documents were submitted to and accepted by the Commission through three different media: direct transmission over telephone lines using asynchronous or bisynchronous modems, 41 diskettes, and magnetic tapes. 42 On July 14, 1992, the EDGAR Pilot was closed and the next day the Pilot participants became the first filers to submit live filings on the operational system.
B. The EDGAR System
1. Background
Development and implementation of an electronic system was authorized as part of the Securities and Exchange Commission Authorization Act of 1987 (EDGAR Authorization Act). In accordance with that authorization, on January 4, 1989, the Commission awarded a contract to build the EDGAR system to BDM International, Inc. (BDM). 43 In addition to developing and implementing EDGAR, BDM also developed a filer assistance software package known as EDGARLink to aid filers in the creation and transmission of electronic format documents. 44 Enhancements to EDGAR will be developed and implemented on an ongoing basis.
The EDGAR contract with the Commission provides for specified services to be sold by the EDGAR contractor at fees regulated pursuant to the contract. The services currently proposed 45 may differ from those ultimately offered depending upon whether there is sufficient subscriber interest to justify each service, i.e., revenues for the service must be sufficient to cover the cost of providing the service plus a reasonable rate of return to the dissemination subcontractor. The subscription price of each regulated product or service will be determined independently; revenues from one product or service will not be used to offset the cost of any other product or service.
On May 1, 1991, the operational EDGAR system was officially opened for test submissions by EDGAR Pilot participants. 46 As noted above, the new EDGAR system began receiving live filings submitted by the former EDGAR Pilot participants on July 15, 1992. Through January 31, 1993, over 7,510 live filings submitted by Transitional Filers had been accepted and disseminated.
2. Structure of the EDGAR System
Registrants and third party filers will be required to submit a completed Form ID, the uniform application for access codes to file on EDGAR, 47 prior to becoming subject to mandated filing. Upon receipt of the completed Form ID, the Commission will send to the filer EDGARLink, the filer assistance software, the EDGAR Filer Manual, 48 and the necessary EDGAR identification numbers and passwords.
EDGARLink will enable the filer to test the submission prior to direct transmission in order to identify many of the technical, formatting and other problems that may result in suspension of the submission. EDGARLink also can be used for checking diskettes prior to submission; however, before using EDGARLink, the documents must be converted to ASCII format. 49 Although use of EDGARLink is not required, filers should find it useful in preparing a document for direct transmission. 50
As in the EDGAR Pilot, a filer may submit an electronic format document via direct transmission, diskette, or magnetic tape. In order to make a direct transmission, a modem, telephone line, and the associated communications software are required. EDGARLink incorporates asynchronous communication software. The filer needs to have only the asynchronous modem and a telephone line. Filers wishing to use bisynchronous communications also must have the modem, a telephone line, and the appropriate communications software.
All direct transmission submissions must be in ASCII format. Filings on diskettes, however, also may be submitted in any of the word processing languages specified in the EDGAR Filer Manual. 51 Such submissions will be translated to ASCII format by EDGAR. 52 If a diskette filer elects not to use one of the designated word processing programs, it must file the submission in ASCII format. Filers choosing this alternative must use an MS-DOS-based 53 word processing language that provides as one of its functions a means of converting document files to an ASCII file. Magnetic tape submissions must be in ASCII or EBCDIC format. 54
The EDGAR system will consist of three subsystems: (1) Receipt and Acceptance; (2) Analysis and Review; and (3) Dissemination. The Receipt and Acceptance subsystem will receive all electronically formatted submissions; automatically check, among other things, for certain items in the submission header, 55 proper formatting, proper filing fees, and form type; 56 notify the filer whether the submission has been accepted or suspended and, if suspended, the reason; hold suspended submissions for six business days until they are corrected or resubmitted; 57 and forward accepted submissions to the Analysis and Review subsystem and the public portions of such submissions to the Dissemination subsystem.
The Analysis and Review subsystem is the means by which the Commission staff receives and examines documents on-line. Public EDGAR filings are accessible in the Commissions public reference rooms, as well as through disseminators. 58 The Dissemination subsystem will be managed by Mead Data Central Inc. and overseen by the Commission. Non-public submissions, such as correspondence accompanying filings, will be available to the Commission staff only, not to the public subject to requests under the Freedom of Information Act (FOIA). 59
III. ELECTRONIC-FILING; RELATED RULES
A. Mandated Filers and Volunteers
Domestic registrants 60 whose filings are processed by the Division will be brought onto the EDGAR system in a series of discrete groups. 61 Section 35A(c)(5) of the Exchange Act 62 requires that mandated filings from a significant test group of registrants be received and reviewed by the Commission for at least six months before the final adoption of any rule requiring electronic filing by registrants. As noted in the Proposing Release, the significant test group will be phased in between April and December 1993, in four groups or installments. Transitional Filers and selected volunteers will commence mandated electronic filing on April 26, 1993 (Group CF-01). The next group (Group CF-02), consisting of approximately 700 registrants whose filings are processed by the Division of Corporation Finance, will begin mandated electronic filing on July 19, 1993. 63 The third (Group CF-03) and fourth (Group CF-04) installments of the significant test group will consist of approximately 700 and 900 registrants, respectively, whose filings are processed by the Division.
The interim EDGAR rules and phase-in schedule adopted today will govern electronic submissions by the significant test group. After the significant test group has successfully filed for at least six months, the Commission will adopt final EDGAR rules modified to reflect the experience gained during that period, together with a revised phase-in schedule, if necessary. Registrants will then be phased in, in groups of approximately 1500, every three months (except for the first calendar quarter of each year), with any new registrants 64 or others not named in the phase-in schedule included in the last group phased in. Most filings made by third parties relating to a registrant, such as proxy contest materials, tender offer materials, and beneficial ownership filings, 65 will be required to be submitted electronically once the subject registrant becomes an electronic filer. 66
Before submitting a mandated electronic filing, each registrant, and each third party making filings with respect to that registrant, must submit a completed Form ID 67 to the Commission in order to receive necessary identification and password codes for filing on EDGAR. 68 Filers are strongly encouraged to submit the Form ID three to six months prior to becoming subject to mandated electronic filing in order to allow them the opportunity to become familiar with EDGAR procedures and prepare test filings. Special arrangements for expedited processing of Forms ID will be made for third party filers who did not know of their electronic filing obligations in advance.
Registrants are encouraged to test file on EDGAR prior to their mandated filing date. 69 The procedures for test filing are detailed in the EDGAR Filer Manual. Telephone lines for direct transmission testing will be available. Acceptance and suspension messages resulting from a test submission will be available immediately to electronic mail subscribers. 70 Electronic filers that elect not to subscribe to the electronic mail service will receive these messages via first-class U.S. mail.
Once a public utility holding company becomes an electronic filer, its subsidiaries will be required to make PUHCA filings in electronic format. 71 Subsidiaries of phased-in public utility holding companies will be permitted, but not required, to file Corporation Finance filings, as well as PUHCA filings, in electronic format before their Corporation Finance phase-in date.
Volunteers will be permitted only on a limited basis, particularly during the significant test group period, in order to assure that there is sufficient Commission filer support staff to answer questions and provide assistance to newly phased-in electronic filers. For example, the Commission may permit subsidiaries of a parent filing on EDGAR to volunteer in order to facilitate the conversion of the parent-subsidiary structure in one step, or in a shorter period of time than that specified in the phase-in schedule. As another example, the Commission may allow foreign private issuers, foreign governments, and others to file electronically. Priority will be given to foreign private issuers that wish to volunteer for electronic filing so as to facilitate transnational capital formation in increasingly global securities markets. 72 Once permitted to file on EDGAR, volunteers will be treated as mandated electronic filers, subject to the same rules as filers that are mandated to be phased in, and not permitted to make required filings in paper except pursuant to a hardship exemption.
In order to provide flexibility for filers entering the electronic system, the rules, as proposed, provide that where the first mandated filing of a phased-in registrant is a Form 10-K or Form 10-KSB, 73 the Form 10-K or Form 10-KSB may, at the option of the registrant, be submitted in paper format. 74
B. Scope and Format of Rules; Regulation S-T
Electronic filing via EDGAR will be governed principally by Regulation S-T. 75 The rules in Regulation S-T prescribe the general requirements and procedures for electronic filing. In the Proposing Release, comment was solicited on the structure of the rules and in particular, whether the modification of the numerous existing rules, forms and schedules was useful to filers or whether it would be preferable to streamline the changes applicable to the electronic filers by grouping them together in Regulation S-T. Upon consideration of the comments received, specific changes applicable to electronic filers have been grouped together in Regulation S-T, to the extent practicable. Accordingly, Regulation S-T has been reorganized and a number of provisions have been moved from the rules, forms and schedules. For example, the requirement that signatures to or within any electronic submission be typed, rather than manual, has been centralized in Regulation S-T. 76 As another example, the provision that an electronic format document, submitted in the manner prescribed by the EDGAR Filer Manual, will satisfy any requirement that more than one copy of such document be filed with or provided to the Commission, has been added to Regulation S-T. 77 In addition, head-notes have been added to the existing rules and regulations advising electronic filers that they should be read in conjunction with Regulation S-T as, for electronic filings, Regulation S-T supersedes many provisions relating to paper documents. This approach should assist filers in familiarizing themselves with the electronic filing rules in an expeditious manner. Paper filings will continue to be governed by existing provisions of the regulations, which will remain in effect even after phase-in is completed since paper filings will be required, or permitted, in limited circumstances. 78
C. Mandated, Permitted, and Excluded Electronic Submissions
1. Mandated Electronic Submissions
a. Filings and Other Documents
The rules adopted today provide, as proposed, that all documents, including filings, correspondence and supplemental information, 79 except as discussed below, submitted by or relating to registrants under the Securities Act, the Exchange Act and the Trust Indenture Act must be submitted electronically in accordance with the phase-in schedule in Appendix B. 80 Once phased in, a registrant will not be permitted to file in paper except: pursuant to a hardship exemption; if it is required to file a Schedule 13D or 13G relating to a registrant not yet phased in; or if it commences a proxy contest or cash tender offer for a registrant not yet phased in. 81 Once a registrant is required to file electronically, most filings made by third parties relating to the registrant, such as proxy materials, tender offer materials, and beneficial ownership materials will be required to be submitted electronically, absent a hardship exemption. 82
Once a filer becomes subject to the mandated electronic filing rules, any documents, including amendments and supplements to documents previously filed in paper, will be required to be filed in electronic format, absent a hardship exemption. For example, if a registrant files a Form S-1 registration statement in paper, and then is phased in, subsequent filings relating to the registration statement, such as pre- and post-effective amendments and Rule 424 filings, would be filed electronically, as well as the associated correspondence. 83
Filings and other documents filed by or relating to a registrant not yet phased in generally will not be permitted to be made electronically. Exceptions have been provided for joint registration statements involving electronic and paper registrants; 84 filings relating to cash tender offers or proxy contests involving a paper bidder and an electronic target; 85 Schedules 13D/G filed by an individual or a not yet phased-in registrant with respect to an electronic registrant, 86 mergers, exchange offers and other business combinations involving a Securities Act registration statement filed by a paper filer seeking to acquire an electronic target; and cash mergers involving a joint proxy statement filed by a paper and an electronic filer. 87 In these circumstances, the status of the electronic filer controls, requiring the paper bidder or acquiror to make filings relating to the particular transaction in electronic format, absent a hardship exemption. 88
If filings are made in paper in violation of the mandated electronic filing requirements, the rules provide certain penalties: the inability to use Securities Act forms incorporating by reference Exchange Act reports, the inability to incorporate the paper filing by reference, and the tolling of certain tender offer dates, as discussed below. 89
b. Filings Made By Individuals
Individuals are required to make several types of filings pursuant to existing regulations. 90 As the Commission believes that filings by individuals are essential to the EDGAR database, the rules provide that third party filings relating to an electronic registrant, whether made by an entity or an individual, domestic or foreign, must be made in electronic format. 91
Initially, Forms 3, 4, 5, and 144, which generally are filed by individuals, will be exempt from electronic filing. However, the Commission anticipates that the electronic filing of these reports will be the subject of future rulemaking.
c. Third Party Filings Made By Foreign Entities or Individuals
While foreign private issuers and foreign governments are not subject to mandated electronic filing, comment was solicited as to whether foreign individuals or entities making third party filings, such as Schedule 13D or tender offer filings with respect to domestic issuers that had been phased in, should be required to file electronically. Commenters generally believed that they should be subject to the same third party filing requirements as domestic filers. Further, several commenters noted that foreign entities or individuals making third party filings with respect to domestic issuers that had been phased in would likely retain U.S. counsel and U.S. printers to assist in their filings. Accordingly, the Commission has determined, as proposed, to require foreign individuals or entities as well as domestic parties, to make such filings in electronic format, absence a hardship exemption.
d. Exhibits
Under the rules adopted today, the objective of ensuring a complete EDGAR electronic database has been balanced against the burden to registrants of converting and refiling previously filed exhibits in electronic format. Under Regulation S-T, exhibits filed in paper prior to the time the filer becomes subject to mandated electronic filing will not have to be refiled in electronic format. 92 Such exhibits may continue to be incorporated by reference into electronic filings. 93 Once the filer becomes subject to mandated electronic filing, any new exhibits will have to be filed in electronic format, absent a hardship exemption. 94
When an electronic amendment is filed to an exhibit previously filed in paper, the proposed rules would have required that the entire exhibit be restated, or alternatively, that both the original exhibit and the amendment be filed in electronic format. Numerous commenters criticized the proposal in view of the substantial burdens and expenses associated with converting the initial exhibit into electronic format. Accordingly, in a desire to alleviate these concerns, the rules adopted today only require that the amendment be filed in electronic format; the previously filed paper exhibit to which the electronic amendment relates will not have to be refiled electronically, except for the articles of incorporation or by-laws of the registrant. 95
Comment was solicited in the Proposing Release as to whether documents that are not frequently amended, such as the articles of incorporation and by-laws, should be required to be refiled in electronic format at the time a registrant becomes subject to mandated electronic filing even if the documents are not being amended at that time. Comment also was solicited as to whether there is a need to require electronic refiling of paper exhibits with finite duration, such as merger agreements, upon amendment. The first issue generated substantial criticism from commenters. Many commenters remarked that the conversion of these exhibits to electronic format would entail substantial time and expense at a time when they were familiarizing themselves with the new electronic filing rules. In light of these concerns, the rules do not include such a provision at this time. With respect to the latter issue, however, amendments to paper exhibits, whether or not of finite duration, will have to be filed in electronic format, absent a hardship exemption, as the Commission has determined not to exempt any particular type of exhibit from electronic filing. However, consistent with the approach outlined above, no restatement upon amendment is required except for the articles of incorporation or by-laws of the registrant. Of course, if it wishes, an electronic filer may refile a complete restatement of the exhibit or both the amendment and the exhibit to which it relates in electronic format.
The Proposing Release noted that the proposed exhibit filing approach should afford filers sufficient time to prepare electronic exhibits upon becoming subject to mandated electronic filing. 96 It also noted, however, that the format of certain exhibits may be difficult to convert to electronic format. 97 As discussed above, the Commission has determined not to exempt any particular types of exhibits from electronic filing. However, registrants may, of course, seek a continuing hardship exemption, if appropriate.
Comment also was solicited in the Proposing Release as to whether registrants should be required to file electronic format summaries of any exhibits filed in paper to ensure the completeness of the EDGAR database. As commenters expressed opposition to this proposal on a variety of grounds, including potential liability, filing burdens, and the limited value of such information, the proposal has not been adopted.
As discussed in detail below, 98 exhibits for which a temporary or continuing hardship exemption has been granted may be submitted to the Commission in paper under cover of Form SE. The Temporary Rules have permitted paper documents that constitute a part of an otherwise direct transmission filing to be submitted to the Commission before or on the date of filing. 99 In the case of the Williams Act filings, the paper documents were permitted to be filed the business day after the electronic filing as well, without delaying acceptance of the electronic filing. 100
In contrast to the Temporary Rules, however, proposed Form SE would have required the paper document to be filed with the Commission only on the same day the electronic format filing to which it relates is filed. Upon consideration of the comments received, particularly as to the logistical problems associated with coordinating the filing of an electronic exhibit with a paper filing, new Form SE will permit exhibits filed in paper pursuant to a temporary or continuing hardship exemption to be filed up to six business days before or on the date of filing the electronic format document. 101 New Form SE, as proposed, will afford no additional flexibility for filing paper exhibits to Williams Act filings. If a paper exhibit under cover of Form SE is unexpectedly delayed beyond the date of filing of the electronic document, the electronic filing still will be accepted, as the automated acceptance procedures cannot detect the presence or absence of a paper document. However, the filing will be incomplete, and an amendment will be required in order to add the exhibit.
As noted in the Proposing Release, certain Commission forms are not currently subject to the exhibit requirements of Regulation S-K. 102 Rather, these forms have specific exhibit requirements unique to each form. Such exhibits may not be easily located in the EDGAR database. Filers should either file these types of exhibits under analogous subparagraphs of Item 601 of Regulation S-K, to the extent an analogue exists, or under paragraph ltEX-99gt of Item 601 of Regulation S-K. Sub-exhibit designations to ltEX-99gt and descriptive explanations of the exhibits in the exhibit index are encouraged. For example, loan agreements to a Schedule 13E-3 103 could be designated as ltEX-99.1gt. The exhibit index could then identify the exhibit as Loan agreement to Schedule 13E-3, initially filed on XYZ date. 104
With the exception of Financial Data Schedules, 105 if an exhibit contains an error that precludes its acceptance, the related filing will not be accepted. Rather, the entire filing, including exhibits, will be suspended and the filer so notified. The filer will then have six business days to correct or resubmit the filing. 106
2. Permitted Electronic Submissions
In general, whether a filing is made electronically depends on whether the registrant to which the filing relates is an EDGAR filer. However, the rules provide alternatives in certain situations where one party is a paper filer and the other is an electronic filer. If an electronic filer is required to file a Schedule 13D or 13G with respect to a paper filer, the rules provide, as proposed, that the electronic filer will be permitted, but not required, to file the Schedule in electronic format. 107 If an electronic bidder commences a cash tender offer or proxy contest for a paper target, the rules provide, as proposed, that the electronic bidder will be permitted, but not required, to file all materials relating to that transaction in electronic format. 108 If the electronic bidder elects to file in electronic format, the paper target also will be given the choice to file in electronic format in order to ensure a level playing field between the parties. If the electronic bidder elects to file in paper, the paper target also will be required to file in paper. If the electronic bidder files in electronic format and the paper target elects to file in electronic format, under the proposed rules, the paper target would have been deemed phased in so that future filings by the paper target would be required to be in electronic format. Comment was solicited as to whether the paper target making such an election should be required to file in electronic format with respect to the particular proxy contest or cash tender offer only. In the interest of fairness and in view of the fact that this type of situation will only arise until 1996 when all filers are phased in, the rules adopted today provide that a paper target making such an election will be required to file in electronic format with respect to the particular proxy contest or cash tender offer only. 109
If an electronic filer engages in an exchange offer, merger or other business combination involving a Securities Act registration statement, such as a Form S-4, 110 to acquire a paper filer, the rules provide, as proposed, that the electronic filer must make all filings in electronic format. If the paper target makes any filing, such as a Schedule 14D-9, 111 it will be permitted, but not required, to file in electronic format. 112 As with proxy contests and cash tender offers, and in a change from the proposed rules, if the paper target elects to file in electronic format, the target must file in electronic format for the particular exchange offer, merger, or other business combination only.
In addition to the filings discussed above, four other documents will be permitted, but not required, to be provided to the Commission in electronic format: solicitation materials submitted to the Commission under cover of Notice of Exempt Solicitation; 113 annual reports to security holders that are furnished to the Commission for its information; 114 the performance graph required in a registrant, proxy or information statement relating to an annual meeting of security holders at which directors are to be elected (or special meeting or written consents in lieu of such meeting); 115 and plan financial statements and schedules prepared in accordance with the financial reporting requirements of ERISA filed to Form 11-K. 116
3. Excluded Electronic Submissions
As described in more detail below, the rules do not permit the electronic submission of: (1) confidential treatment applications; (2) preliminary proxy or information statements relating to Item 14 of Schedule 14A (Mergers, consolidations, acquisitions and similar matters), if confidential treatment is desired; (3) supplemental information, if the submitter requests that the information be returned after staff review, and/or the submitter requests that the information be protected from public disclosure under FOIA pursuant to a request for confidential treatment; 117 (4) shareholder proposal submissions; (5) no-action and interpretive requests; (6) Forms SR; 118 (7) Trust Indenture Act applications for exemptive relief; (8) Forms 3, 4, and 5; (9) Regional Office filings; (10) filings related to offerings exempt from Securities Act registration; 119 (11) sales literature; (12) foreign language documents and symbols; (13) Exchange Act filings submitted to the Division of Market Regulation; and (14) documents submitted pursuant to the Rules of Practice that relate primarily to investigations and litigation.
a. Confidential Treatment Applications
Confidential treatment applications will continue to be submitted in paper rather than via EDGAR, so that filers will have an opportunity to become familiar with electronic filing procedures. 120 When a confidential treatment application is filed, the electronic filer will be required to file in electronic format the redacted document that is the subject of the confidential treatment application. For example, if an electronic filer desires confidential treatment of the pricing information in a material contract 121 required to be filed with its Form 10-K, then the electronic filer will submit the Form 10-K in electronic format, redacting the pricing information from the contract that is filed as an exhibit and submit the confidential treatment application including the redacted information, in paper. 122 Care should be taken to redact the confidential information properly, because if an electronic filer inadvertently includes material for which confidential treatment was requested in its electronic submission, the material will be disseminated publicly and thus no longer will be entitled to confidential treatment.
If the confidential treatment application is denied and all appeal rights are exhausted, 123 the material for which confidential treatment had been requested (i.e., the previously redacted material), must be filed electronically as an amendment. If the filer fails to do so, the Commission will make the information publicly available in paper.
b. Certain Preliminary Proxy Materials
In the Proposing Release, it was contemplated that preliminary proxy materials and information statements would be filed electronically, but would not be disseminated to the public until definitive materials were filed. However, with the adoption of the new proxy rules pursuant to the Commissions general reexamination of the proxy process, 124 all preliminary proxy materials and information statements are deemed public upon filing, except those relating to a business combination governed by Item 14 of Schedule 14A, 125 which may be afforded confidential treatment upon appropriate marking of the filed materials. 126 Consistent with the treatment of other confidential treatment material discussed above, registrants who desire confidential treatment of such preliminary proxy materials or information statements should file them in paper, marked as provided in the revised proxy rules. 127 If filed electronically, all preliminary proxy material and information statements will be treated as public and will be immediately disseminated. 128
c. Regional Office Filings and Offerings Exempt from Securities Act Registration
Currently, the following documents are, or may be, submitted to the Commissions Regional offices: Form SB-2; 129 Form 1-A, 130 the Regulation A 131 offering statement; Form 1-F notification statements; 132 and competitive bidding registration statements. 133 Regional Office filings may not be made in electronic format at this time. 134
Registration statements on Form SB-2 filed at the Commissions Headquarters are treated in the same manner as those filed on Form S-1, in that the registration statement will be filed in paper before the small business issuer becomes subject to mandated electronic filing and in electronic format after the registrant has become an electronic filer. As Form SB-2 is available to Exchange Act reporting companies as well as companies making their initial public offerings, these registrants may be listed in any of the phase-in groups.
Form 1-A will continue to be filed in paper either at the Commissions Headquarters or the appropriate Regional Office. 135 Other filings relating to offerings exempt from Securities Act registration, such as Form D notices 136 and Form 144, which are filed at the Commissions Headquarters, also are excluded from electronic submission.
In particular, the rules do not provide for electronic filing of offerings of fractional undivided interests in oil and gas rights made under Regulation B as these filings contain extensive graphic materials, which are not easily accommodated by the electronic filing system. Moreover, as noted in the Proposing Release, given the limited number and size of these filings, 137 there does not appear to be a substantial need for the electronic filing and dissemination of this information.
There are no current plans to require the filing of documents relating to exempt offerings in electronic format, except for Form 144.
d. Foreign Language Documents and Symbols
Foreign language documents are excluded from electronic filing, as proposed. 138 If a foreign language document is required to be filed, for example, as an exhibit to a filing on Form F-1 139 or F-6, 140 then a document that is a fair and accurate English translation of the foreign language document must be filed and a representation to that effect must be included and signed by a designated officer of the filer. 141 The rules adopted today also require that upon request any foreign language document required to be filed must be provided to the Commission or the staff. 142
To ensure the widest possible dissemination and use of the EDGAR data, the rules also prohibit, as proposed, the use of representative symbols for foreign currency, such as the symbols for pounds and yen, as these symbols may not be recognizable by all forms of printers. Accordingly, electronic filers are required to express foreign currency denominations in English words or letters in their electronic format documents rather than representative symbols; 143 however, consideration is being given to whether in the future, EDGAR will be able to accept representative symbols for foreign currency.
e. Forms SR; Sales Literature; Forms 3, 4, and 5; Shareholder Proposal Submissions; No-Action and Interpretive Letter Requests; Formal Exemptive Requests Pursuant to Exchange Act Section 12(h); and Exemptive Requests and Applications Pursuant to the Trust Indenture Act.
As proposed, the following documents are excluded from electronic submission via EDGAR: Forms SR; 144 sales literature; 145 Forms 3, 4, 5, and 144; shareholder proposal submissions pursuant to Exchange Act Rule 14a-8(d) and related correspondence pursuant to Exchange Act Rule 14a-8(e); 146 no-action and interpretive letter requests; 147 formal exemptive requests pursuant to Section 12(h) of the Exchange Act; 148 and exemptive requests and applications pursuant to the Trust Indenture Act. 149 No plans currently exist for the electronic filing of these documents, except for Forms 3, 4, and 5.
f. Other Excluded Electronic Submissions
Documents that relate primarily to enforcement investigations or litigation 150 as well as Exchange Act filings that are processed by the Division of Market Regulation 151 also have been excluded from electronic submission as proposed. 152 No plans currently exist for the electronic filing of these documents.
D. Filing Procedures and Related Rules
1. Hours of Operation
Currently, the Commission receives and accepts paper filings between the hours of 8:00 a.m. and 5:30 p.m. Eastern Time, 153 Monday through Friday, except for holidays. In the EDGAR Pilot, filings on diskettes and magnetic tapes were received, and most acceptance processing occurred, during those hours. Direct transmission filings made on the Pilot were permitted between 7:30 a.m. and 7:00 p.m. Eastern Time 154 on Commission business days. Direct transmission filing sessions that commenced after 5:30 p.m. Eastern Time, if accepted, received the next business days filing date.
The Commission has determined to retain the existing hours of 8:00 a.m. to 5:30 p.m. Eastern Time for receipt of diskette and magnetic tape filings, 155 and to revise filing hours to 8:00 a.m. to 10:00 p.m. Eastern Time for receipt of direct transmission filings, as proposed. 156 As noted in the Proposing Release, the 10:00 p.m. Eastern Time limit reflects the request of filers for extended hours and the need to provide time for maintenance of the EDGAR system and sufficient Commission filer support staff to respond to filer questions during this extended period. While acceptance procedures will be automated in EDGAR, 157 the Commission intends to make filer support staff available between 8:00 a.m. and 10:00 p.m. Eastern Time to assist filers with issues that may arise in accessing the system and during the acceptance process. Although a few commenters on the proposed rules urged that the system be available for the receipt of filings 24 hours a day, these extended filing hours are not currently feasible, as time is required for system maintenance, including the performance of backup procedures. Current budgetary constraints also limit the availability of filer support staff.
As noted in the Proposing Release, direct transmission submissions may not be commenced after 10:00 p.m. Eastern Time. Further, direct transmissions in process at 10:00 p.m. will be disconnected. If a filing within an electronic multi-filing submission is interrupted because the transmission was disconnected at 10:00 p.m., that filing must be resubmitted in its entirety the next business day, together with any other filings in the submission whose transmission was not completed the night before. Accordingly, a direct transmission filer should determine that it has sufficient time to transmit the complete submission before 10:00 p.m. Eastern Time. 158
2. Receipt and Acceptance
a. Date of Filing
The proposed rules provided that the date of filing 159 for electronic filings, pursuant to the Securities Act, Exchange Act and Trust Indenture Act, except for certain cash tender offer 160 and Schedule 13D filings, would have been the business day on which the filing was received, if: (i) the filing was submitted on or before 5:30 p.m. Eastern Time; 161 (ii) the required filing fee was paid in the manner prescribed; 162 and (iii) all requirements of the Acts and rules applicable to such filing have been complied with and the filing conforms to the applicable technical standards regarding electronic format. 163 As noted in the Proposing Release, these requirements mirror the requirements applicable to paper filings. 164
Comment was solicited as to whether Schedule 13Ds and certain cash tender offer filings should receive a filing date corresponding to the transmission date only if such filings had been received and accepted on or before 5:30 p.m. Eastern Time, given their importance to the market. Commenters noted that this proviso would create uncertainty on the part of filers, since the time of acceptance would not be within their control. Accordingly, the date of filing rule has been adopted as proposed, except that Schedule 13D and cash tender offer filings will be treated like all other filings.
Although automated acceptance processing of some filings submitted on or before 5:30 p.m. Eastern Time may not be completed until after 5:30 p.m., they will nonetheless receive a filing date corresponding to the date of receipt, provided that the conditions for acceptance are met. Electronic filings made via direct transmission commencing after 5:30 p.m. Eastern Time will receive the next business days filing date, provided that the requisite conditions are met. As proposed, where multiple filings are submitted in a single direct transmission, each filing will be treated separately in determining the date of filing. For example, if the first filing was commenced before 5:30 p.m., but the other filings in the transmission commenced after 5:30 p.m., the first would receive the filing date corresponding to the date of receipt, provided all other conditions were satisfied, but the others would receive the next days date as the filing date. 165
If the transmission of a filing is interrupted for any reason, requiring the filing to be resubmitted later, the filing date will be based on the date and time of the resubmission session that corrects the problem. 166 If resubmission is required due to difficulties beyond the filers control, the filer may request the staff to adjust the filing date to the date and time of the initial submission. 167
If a filing contains errors preventing its acceptance as initially submitted, 168 it will be placed in a suspense file for up to six business days, as proposed. This period appears to be reasonable, given the need to limit the data stored on the Commissions electronic system and the fact that error messages will be available immediately to those filers who subscribe to the EDGAR electronic mail service, enabling such filers to take advantage of the full six business day period to correct their filing. 169 A filing in suspense will be considered filed as of the business day on which it was corrected or resubmitted in a form that was accepted. If a filing in suspense is not corrected, using EDGARLink, the filer assistance software, or resubmitted and accepted within six business days, it will be deleted from the systems file of pending submissions. 170 After that, the Commissions filer support staff will not have access to the document to provide assistance and there will be no further ability to correct the filing.
b. Acceptance Processing
As noted in the Proposing Release, acceptance procedures will be automated in the EDGAR system, and acceptance will begin promptly after receipt of an electronic document, 171 except in unusual situations, such as during peak filing times. 172 Staff will be available between 8:00 a.m. and 10:00 p.m. Eastern Time to assist filers in accessing the system and to answer questions associated with the acceptance of filings. Under the terms of the EDGAR contract, acceptance processing must begin no later than two hours after receipt of direct transmission of time-sensitive filings such as Schedules 13D, tender offers and proxy contests, 173 and acceptance processing of non-sensitive filings must begin no later than four hours after receipt. 174
A filing will be accepted when EDGAR verifies electronically that the filing conforms to specified electronic formating requirements, and, with respect to a Securities Act filing, that the required fee has been paid. Verification of compliance with applicable technical requirements regarding format will consist of confirmation that the filing is presented in the format prescribed by the then current EDGAR Filer Manual. 175 Once EDGAR has completed these processes, an acceptance message will be sent to the filer.
Failure to comply with certain technical format requirements will result in suspension of the filing until the formatting problems are corrected. For example, an electronic submission will be suspended if the number of documents actually submitted is greater than the number specified in the submission header, since an extra document might have been submitted in error. 176
In certain instances, although a filing has formatting or other errors, it will be accepted, and a message will be sent to the filer. For example, if a submission contains fewer documents than the number specified in the submission header, then the submission may be accepted, but the acceptance message will indicate that there is a discrepancy between the number of documents received by EDGAR and the number of documents specified. In addition, circumstances may arise in which a document containing a limited number of invalid symbols will be accepted as submitted, with a circumflex symbol ( ) substituted for each invalid symbol in the document disseminated, if the staff concurs. 177
While there will be staff available to assist filers in electronic filing and address issues relating to electronic errors, it is not anticipated that the Commission staff will respond orally to inquiries regarding the status of filings. Filers may subscribe to the EDGAR electronic mail service to receive notices of the acceptance or suspension of a filing on a real-time basis as soon as the process is complete. 178 Filers who do not subscribe to the EDGAR electronic mail service will be advised of the results of acceptance processing through first-class U.S. mail. If the filing is accepted, the acceptance notice also will advise the filer whether the filing contains any errors which should be avoided in the future but which are not of sufficient magnitude to result in suspension. If the filing is suspended, the notice of suspension will specify the problems that caused the suspension, incuding non-payment of a fee, so that the filer can correct 179 or resubmit the filing within six business days. 180
c. Date of Dissemination
Generally, as noted in the Proposing Release, public filings will be received, accepted and disseminated electronically on the same day. 181 For example, filings that are accepted on or before 5:30 p.m. will be available to all Level I subscribers upon acceptance. 182 Magnetic tapes of these filings will be delivered overnight to Level I interactive, magnetic tape Level I, and Level II subscribers. 183 These filings also will be accessible by the Commission staff and the public through the Commissions public reference room terminals on their date of acceptance.
Public filings received on or before 5:30 p.m., but accepted after 5:30 p.m., will be deemed filed the day of receipt and will be disseminated that evening to interactive Level I subscribers and broadcast Level I subscribers as well as to the Commission staff and the Commission public reference room open after 5:00 p.m. Eastern time. 184 These filings will be included with filings accepted the next business day for overnight magnetic tape delivery to interactive Level I, magnetic tape Level I, and Level II subscribers.
Filings received and accepted after 5:30 p.m. will be deemed filed the next business day, which also will be the date on which they will be disseminated to Level I subscribers and included in the magnetic tapes.
3. Identification and Login Procedures
In order to submit documents electronically, EDGAR access codes and passwords are required. Registrants, third party filers, and their agents are required to submit a Form ID, the uniform application for access codes to file on EDGAR, to the Commission. 185 Upon receipt of the completed Form ID, the Commission will mail the EDGAR access codes and passwords and in addition furnish a copy of the EDGAR Filer Manual as well as EDGARLink, the filer assistance software. 186
In some cases it may be essential to obtain the access codes and passwords on very short notice, for example, where a third party has just decided to engage in a proxy contest or tender offer. If necessary, the Form ID may be sent to the Commission by facsimile or courier. The staff will process the Form ID expeditiously and issue an initial set of numbers to the potential filer by facsimile or to a registrants courier after having made a confirming telephone call to the contact person listed on the Form ID.
Form ID must be used to request the following access codes: Central Index Key (CIK) numbers, 187 passwords, 188 and CIK confirmation codes (CCC). 189 Form ID also must be used to obtain a password modification authorization code (PMAC), a non-public code which allows a filer to change the password on-line if it was compromised or at the filers option to insure continued protection. 190 The identification procedures provide a means to ensure the accurate identification of each registrant, third party filer, or agent. 191
As noted in the Proposing Release, special procedures for assigning CIKs, passwords and CCCs are required for electronic filing where new entities are formed following effectiveness of a Securities Act registration statement, as with asset backed securities offerings, including collateralized mortgage offerings, serial offerings, limited partnership offerings, and other similar offerings. For example, with asset backed securities offerings, the originator of the offering files an initial registration statement using its CIK number, password and CCC. The originator then files a Rule 424 prospectus 192 using its CIK number, password and CCC when a new legal entity is formed to take down tranches of securities covered by the registration statement. The submission header to the Rule 424 prospectus must identify the new legal entity as being distinct from the registrant by using the tag ltSERIALgt. Upon receipt of the Rule 424 prospectus with the tag ltSERIALgt in its header, EDGAR will assign both a CIK number and a file number to the new legal entity and advise the originator of the offering of these new numbers as part of the acceptance message. 193 The new legal entity is required to submit a manually signed Form ID to obtain its password and other identifying codes for use in connection with subsequent filings.
4. Headers
Headers contain key information about the electronic submission. They are a critical element in any electronic communication, as they identify for the computer the data being transmitted and provide other necessary instructions to facilitate proper processing. Headers must be precise, complete and prepared according to strict guidelines in order to be understood by the computer. Each electronic submission will contain two types of headers, a submission header and a document header for each document transmitted, e.g., a cover letter, a registration statement, and each exhibit. The detailed requirements for EDGAR headers are set forth in the EDGAR Filer Manual. 194
5. Testing
Filers are urged to submit test filings in order to become familiar with the electronic filing system. If the EDGARLink software is used, 195 a filer may test at its workstation without needing to submit any filings to EDGAR. Alternatively, the filer may elect to submit test filings to EDGAR, as described further in the EDGAR Filer Manual.
In the Proposing Release, comment was solicited as to whether EDGAR should, as proposed, treat an electronic filing, without any identification as to test or live filing, as a live rather than as a test filing. Under the proposed system, if a filer failed to identify filings as test, EDGAR would treat them as official filings and if they contained no suspendable errors, the filings would be accepted and the public portions, if any, would be publicly disseminated. Several commenters suggested that filings without any identification as to test or live filing should be treated as test in order to prevent inadvertent public dissemination. However, the Commission has determined to adopt the system as proposed, primarily because if unidentified filings are treated as test, then filings that are otherwise timely filed will be rejected for lack of a ltLIVEgt tab. Accordingly, filers should be extremely cautious about properly identifying any test filing. Filers may use the ltTESTgt tag in filings on tape, diskette, or via direct transmission. Alternatively, filers using asynchronous direct transmission (EDGARLink or non-EDGARLink) may log in explicitly to send a test. The EDGARLink choice is Transmit Test Filing to SEC; the non-EDGARLink option is Test Filing. Using either of these special log-in choices causes the system to transmit a special test marker with the filing(s). The filing(s) submitted as test will be error-checked but will not be accepted or disseminated even if correct.
6. Safe Harbor
The proposed rules included a safe harbor which provided that an electronic filer would not be subject to the liability and anti-fraud provisions of the federal securities laws with respect to an error or omission in a document resulting solely from the good faith transmission of such document via EDGAR, whether by magnetic tape, diskette or direct transmission, so long as the error or omission was corrected no more than five business days after the electronic filer became aware of the error or omission. 196 Commenters overwhelmingly favored the concept of a safe harbor for electronic submission errors resulting from elements outside of their control. The adopted rule has been revised to make it clear that the safe harbor applies only in such circumstances. 197 It is not available where an electronic filer makes typographical errors or other mistakes while preparing an electronic format document for transmission.
While the proposal would have established a five business day period for filing a required electronic amendment, a facts and circumstances approach has been adopted. Accordingly, the safe harbor will be available with respect to an error or omission in an electronic filing that results solely from electronic transmission errors beyond the control of the filer where the error or omission is corrected by the filing of an amendment in electronic format as soon as reasonably practicable after the filer becomes aware of the error.
7. Filing Fees; Lockbox
As was true in the EDGAR Pilot, Transitional Filers who make direct electronic submissions are required to use the Commissions lockbox depository 198 for the payment of filing fees. 199 Lockbox fee payment also is available, on an optional basis, for filers who submit electronic filings on diskette or magnetic tape, as well as for paper filers. 200
As proposed, the rules adopted today require all electronic filers to pay fees via the lockbox at the U.S. Treasury designated lockbox depository maintained by the Commission at the Mellon Bank in Pittsburgh, Pennsylvania. This requirement will be phased in along with electronic filing. Thus, a fee paid with respect to any electronic filing, whether by direct transmission, tape or diskette, will be paid via the lockbox. The lockbox procedures are intended to facilitate Commission compliance with United States Treasury Regulations 201 promulgated under the Deficit Reduction Act of 1984, 202 which require federal agencies to achieve same-day or next-day deposit or monies. A rule in Regulation S-T 203 requires electronic filers to pay filing fees in accordance with the lockbox procedures, including those pertaining to documents filed in paper pursuant to a hardship exemption.
The Securities Act requires that the filing fee be paid at the time of filing and accompany the filing. 204 A Securities Act registration statement (including a Securities Act filing by an investment company) will be deemed filed as of its date of receipt provided that all of the conditions of acceptance are satisfied, 205 including verification of fee payment at the lockbox. 206 If payment is not confirmed until the day following receipt by the Commission, the filing will be assigned a filing date as of the date of confirmation of payment, not the date of receipt. 207 If payment cannot be verified, the filing will be placed in a suspense file for up to six business days and the filer will be so notified. If the filer corrects the problem within the six day period and fee payment is confirmed, the filing will be considered filed as of the business day on which verification occurs. A suspended filing that has not been corrected and accepted within the six day period will be deleted from the systems file of pending submissions. In such cases, the filing must be resubmitted with the appropriate fee and accepted.
Filers should be aware that fee payments made via wire transfer will be verified on a near real-time basis (every 15 minutes), while those made by check will be verified on a daily basis. Accordingly, a filer may wish to pay fees with respect to a time-sensitive Securities Act registration statement by wire transfer in order to expedite acceptance processing. 208
E. Hardship Exemptions and Adjustment of the Filing Date
1. General
Regulation S-T includes three provisions to address difficulties in the electronic submission of documents: a temporary hardship exemption; a continuing hardship exemption; and an adjustment of the filing date. 209 Delegated authority to the Director of the Division to grant or deny requests made pursuant to the continuing hardship exemption and the adjustment of the filing date provisions also has been provided. 210
2. Temporary Hardship Exemption and Form TH
As proposed, the rules provide for a temporary hardship exemption when an electronic filer experiences unanticipated technical difficulties preventing the timely preparation and submission of an electronic filing. 211 Examples of such technical problems might include a storm that interrupts power to the filers area or problems with the filers computer equipment that had been used previously to transmit either test or required electronic filings successfully.
A number of structural changes have been made to the temporary hardship exemption in response to comment. First, the proposed rules would have required the Commission, or the staff acting pursuant to delegated authority, to grant a request made by an electronic filer after determining that the request was appropriate and consistent with the public interest and the protection of investors. In recognition of the fact that requiring staff consideration of such requests could present practical difficulties for both the Commission staff and filers, particularly with respect to filing problems encountered late in the day, the rules provide that an electronic filer may obtain the exemption simply by filing the subject document in paper under cover of Form TH, Notification of Reliance on Temporary Hardship Exemption, 212 which will be a public form, like Form 12b-25. 213 Although no staff involvement is required to obtain a temporary hardship exemption, Division staff will monitor its use. Abuse of the system will result in the rule being changed.
In a change from the proposals, the electronic filer will be required to file in paper the document for which the exemption is sought no later than one business day after the date the filing was to be made. 214 In addition, Form TH, rather than the request, must include the following information: (1) the reasons for the requested exemption; (2) a description of the nature and extent of the temporary technical difficulties experienced by the electronic filer in attempting to submit the document in electronic format; (3) a description of the extent to which the electronic filer has successfully submitted documents previously in electronic format with the same hardware and software, for test or required filings; and (4) a description of the burden and expense that would be involved to use alternative means to make the electronic submission. 215
The official filing for purposes of the federal securities laws will be the microfiche copy generated by the Commission of the paper format document that accompanies the Form TH. The cover page of the paper filing must contain the following legend in capital letters: IN ACCORDANCE WITH RULE 201 OF REGULATION S-T, THIS (SPECIFY DOCUMENT) IS BEING FILED IN PAPER PURSUANT TO A TEMPORARY HARDSHIP EXEMPTION. 216 If the request pertains to documents filed pursuant to Section 13(a) or 15(d) of the Exchange Act and the filing is submitted in paper within the time period mandated by the temporary hardship exemption rule, the paper filing will be deemed filed by its required due date. 217
To assure the completeness of the EDGAR database, the rule requires the filer to submit a copy of the document in electronic format within six business days of submitting the filing in paper format (rather than in three business days as proposed). 218 The electronic format copy must contain the following statement in capital letters: THIS DOCUMENT IS A COPY OF THE (SPECIFY DOCUMENT) PREVIOUSLY FILED ON (DATE) PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION. 219
The rule provides that, as proposed, for those Securities Act registration statements that incorporate by reference Exchange Act periodic reports, use of the form is conditioned upon the electronic filer having submitted all required electronic filings, including confirming electronic copies with respect to those reports. 220 This condition applies without regard to the length of time that has elapsed since the failure to submit a required confirming electronic copy of an incorporated periodic report, as proposed. An electronic filer will have to be current in making required electronic filings, rather than both current and timely, 221 so that a filer could file all of its required electronic filings just prior to filing a privileged form.
Further, Regulation S-T prohibits electronic filers from incorporating by reference any document filed in paper in violation of the mandated electronic filing requirements, or any document filed in paper pursuant to a temporary hardship exemption for which a confirming electronic copy has not been submitted. 222 Finally, amendments to the tender offer rules 223 provide that where a bidder who is an electronic filer, without a hardship exemption, fails to file in electronic format a Schedule 13E-4 or Schedule 14D-1 tender offer statement with the related offering documents, as well as any amendments to such documents, the period for which the tender offer must remain open is tolled for the period of noncompliance. 224 If the bidder files the foregoing documents in paper pursuant to a temporary hardship exemption, the minimum offering period will be tolled if the confirming electronic copy is not filed within the six day period established in the temporary hardship exemption rule; tolling will continue until the confirming electronic copy is filed.
3. Continuing Hardship Exemption
The rules, as proposed, provide that an electronic filer may apply in writing for a continuing hardship exemption from the electronic filing provisions if the filer is unable to submit all or part of a filing, or group of filings, in electronic format because of undue burden and expense or impracticability. 225 The exemption might be appropriate, for example, for filings of a company under the protection of a bankruptcy court where electronic filing may be burdensome, or for voluminous material contracts of an acquired company, the conversion of which would present undue hardship to the acquiror. Unlike the temporary hardship exemption, the continuing hardship exemption does not require that the paper filing be shortly followed up by an electronic copy. The Commission anticipates that grants of the continuing hardship exemption will be circumscribed as narrowly as possible, given the ease of submitting electronic filings generally and the need to ensure the completeness of the EDGAR database. 226
The electronic filer, as proposed, will be required to submit a written application to the Commission for a continuing hardship exemption ten business days prior to the required due date of the filing or the proposed filing date, as appropriate, or within such other shorter period as may be permitted. Factors to be addressed include: (1) the reasons for not submitting electronically all or part of the document, or group of documents, as well as justification for the time period requested; (2) the reasons that the necessary hardware and software are not available without unreasonable burden and expense; and (3) the burden and expense involved to employ alternative means to file the electronic document. 227 As with the temporary hardship exemption, comment was solicited as to whether the request should be public or non-public. The rules adopted today provide that the applications will be treated like correspondence and thus not routinely available to the public, subject to requests under FOIA. The rule specifically provides that the application for a continuing hardship exemption is not deemed granted until the applicant is notified by the Commission or the staff. 228 If the filer is notified that the request is granted, the paper filing must be made on the required due date as specified in the applicable form, rule or regulation, or the proposed filing date, as appropriate. The grant of the continuing hardship exemption will not exempt the filer from the filing requirements of applicable forms or other provisions of the federal securities laws. 229 The paper document must contain the following legend in capital letters at the top of the cover page: IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS (SPECIFY DOCUMENT) IS BEING FILED IN PAPER PURSUANT TO A CONTINUING HARDSHIP EXEMPTION. 230
If the Commission, or the staff acting pursuant to delegated authority, denies the application, then the electronic filer must file the required filing in electronic format on the required due date or the proposed filing date or such other date as may be permitted. 231
Subject to the terms and conditions that the staff may impose, a continuing hardship exemption may be granted, in limited instances, for a finite time period. 232 In such case, the electronic filer could be required to file the document that is the subject of the exemption in electronic format at the conclusion of such period.
4. Adjustment of Filing Date
Current rules permit the staff, pursuant to delegated authority, to adjust the filing date of an electronically submitted document where acceptance of the filing is delayed because of equipment malfunction or other technical problem. 233 The Division has exercised its discretion to adjust filing dates where transmission has been delayed due to malfunction in the Commissions system or where receipt was delayed because of technical difficulties experienced by the filer in transmitting a filing.
These provisions, as proposed, are replaced by a similar rule 234 which permits an electronic filer to request an adjustment of the filing date of an electronic document, 235 regardless of the electronic medium, when the electronic filer encounters technical problems beyond its control which prevented electronic submission by the due date specified by the applicable form or rule. 236 Generally, adjustments of filing dates would only be appropriate for documents filed pursuant to Section 13(a) or 15(d) of the Exchange Act. As noted in the Proposing Release, the Commission generally would not adjust a filing date pertaining to a transactional filing, such as a tender offer filing or a Securities Act registration statement. Although back-up measures have been instituted to assure EDGAR will be fully operational at all required times, if a situation did arise that resulted in delay on the EDGAR system, the Commission could adjust the filing date.
F. Signatures
1. Background
The Temporary Rules governing the EDGAR Pilot defined the term signed to mean the entry, in the form of a magnetic impulse or other form of computer data compilation, of any symbol or series of symbols executed, adopted or authorized as a signature. 237 In the EDGAR Pilot, two methods of signatures were used, depending on the filing medium. Electronic filings made on diskette or magnetic tape contained conformed signature pages and manually signed copies of the signature pages, opinions and consents were submitted under cover of temporary Form ET. In contrast, submissions by direct transmission used personal identification numbers (PINs). PINs are unique sets of characters assigned by the Commission which represent the signatures of persons required to sign a form of document such as officers, directors, accountants and experts. 238
2. Requirements in EDGAR
All commenters who addressed the issue of signatures supported both the proposal that signature requirements would be satisfied if the signatorys name appears in typed form and the proposed elimination of PINS, which were used in the EDGAR Pilot. Accordingly, the rules adopted today, like the rules applicable to Transitional Filers, provide that statutory and non-statutory signature requirements are satisfied if the signatorys name appears in typed form. Thus, the term signature is defined as the electronic entry in the form of a magnetic impulse or other form of computer data compilation of any letter or series of letters comprising a name, executed, adopted or authorized as a signature. 239 Typed signatures will be required under all statutes and rules for all media of electronic submission. Typed signatures also are adequate for all related materials submitted via EDGAR, such as correspondence, acceleration requests, and applications. This approach eliminates both the practical problems associated with PINs and the need to revise the signature requirements found in various rules and forms, which will remain the same as for paper filings. 240 The security controls in the EDGAR system for access and transmission should help guarantee the viability of a typed signature system.
Commonly accepted legal principles provide that the term signature means any symbol executed or adopted by a party with the present intention to authenticate a writing. 241 A signature may be written by hand, stamped, typewritten and engraved, among other means. 242 The current definition of signed under the EDGAR Temporary Rules applicable to Transitional Filers comports with these principles, as does the definition of signed under the adopted rule. 243 By requiring that the symbol be entered physically into the document, the present intention to authenticate would be demonstrated.
In the Proposing Release, the rules and forms under the various Acts were proposed to be amended by adding provisions alerting electronic filers to the typed signature requirement. 244 However, consistent with the objective of streamlining changes applicable to electronic filers by grouping them together in Regulation S-T, signature rules are only set forth in Regulation S-T.
Comment was solicited in the Proposing Release on the necessity or usefulness of requiring filers to retain a manually signed document to be made available to the Commission and others upon request, and if so, whether three years, five years or some longer time, such as ten years, should be specified. Commenters were divided on the necessity of such a requirement. Some commenters believed that policies relating to retention of manually signed pages should be set by the company, and that companies most likely will retain them as a means of internal control. Others stated that filers should be required to maintain a manually signed conforming copy of the signature page of an electronically filed document for evidentiary purposes. Upon reconsideration, the Commission has determined to mandate the retention of a manually signed signature page or other document authenticating, acknowledging or otherwise adopting the signatures that appear in typed form within an electronic filing, to be made available to the Commission or its staff upon request, for a period of five years. 245 Further, the signature authorization must be executed before or at the time the electronic filing is made.
In a change from the proposals, manual signatures are required for Form SE, the form for submission of paper exhibits, except where the Form SE pertains to an exhibit filed pursuant to a temporary hardship exemption. In that case, the signatures to the Form SE may be typed in order to avoid exacerbating timing difficulties. 246 Form ID retains the requirement for manual signatures, as proposed, as this form initiates a filers access to the EDGAR system.
3. Powers of Attorney and Consents
Section 7 of the Securities Act requires, with limited exceptions, the filing of a written consent of any expert named in the registration statement as having prepared or certified any part of the registration statement, or named as having prepared or certified a report or valuation for use in connection with the registration statement. 247 In the EDGAR Pilot, the majority of participants filed manually signed powers of attorney or consents of experts in paper under temporary Form SE for all media of electronic submission.
The Proposing Release solicited comment regarding any continuing need for PINs in the context of expert signatures, particularly with respect to accountants consents and accountants reports, or whether there is any other means for independent professionals to have their signatures verified. The overwhelming majority of commenters believed that typed signatures should be adequate for powers of attorney and consents. Accordingly, the requirement that signatures be in typed form is applicable to powers of attorney and consents of experts. 248
IV. PRESENTATION AND ENTERING OF INFORMATION
A. Modular Submissions and Segmented Filings
The EDGAR Pilot used a modular submission procedure successfully for several years. 249 This procedure allows electronic filers to submit information that is intended to become a part of more than one filed document to a non-public EDGAR data storage area and then transfer the information to an official electronic filing, as desired. In the EDGAR Pilot, this submission method was restricted to investment companies; however, under the operational EDGAR system, all electronic filers that subscribe to the optional EDGAR electronic mail service may use modular submissions. 250 This feature eliminates the need for submission of duplicative information, which is of particular value when substantially similar information is required in more than one filing. 251
Commenters found the function of modular submissions to be useful and desirable. For example, an electronic filer could use the modular submission procedure to file the description of business as one modular document, the description of property as a second modular document, audited year end financial statements and managements discussion and analysis as a third modular document, disclosure on directors, executive officers and control persons as a fourth modular document, and exhibits as a fifth modular document. The electronic filer then could file a Form S-1 registration statement which instructs the EDGAR system to insert each of the five modular documents into specified places in the Form S-1. With respect to an annual proxy statement, the electronic filer could request that only the directors, executive officers, and control persons disclosure module be included in a specified location in the proxy statement.
Since modular submissions require closer coordination and more prompt communications between EDGAR and the filer than other submissions, the rule governing modular submissions specifies that only those electronic filers that subscribe to the EDGAR electronic mail service may make modular submissions. 252 Such filers will be allowed up to ten modular submissions in the non-public EDGAR data storage area at any time, not to exceed a total of one megabyte of digital information (approximately 300 double-spaced typed pages). 253 If an electronic filer attempts to submit a modular filing which, if accepted, would cause either of these limits to be exceeded, EDGAR will suspend the modular submission and notify the electronic filer by electronic mail. After six business days, the modular submission held in suspense will be deleted from the EDGAR system. 254 No time periods have been set with respect to the use of modular submissions; the data included in the submission must remain current enough to satisfy the requirements of the filing in which it is included.
Inasmuch as EDGAR will not permit parts of modular submissions to be extracted and used separately, an entire modular submission must be used. If updating is required, or changes are made for other reasons, an entirely new modular submission must be substituted for the previously existing one.
The modular submission will not constitute an official filing 255 or be deemed filed for purposes of the federal securities laws. 256 However, once the filer includes a modular submission in a particular filing, all pertinent liability provisions of the federal securities laws will apply to the information. 257
The EDGAR filer could use the modular submission in any number of official filings. The use of information from a modular submission would not be a form of incorporation by reference. 258 Unlike incorporation by reference, which includes disclosure from one required filing in another required filing by an express statement describing the inclusion, the text of the modular submission would be physically set forth in the designated location in the required filing. As a result, both the electronic and microfiche copy of the filing, as well as any paper printouts, would be complete.
Another feature designed to assist filers in submitting voluminous data is segmented filing. Material submitted as segments may originate from several different geographic locations using different transmission media, and may be submitted over a period of six business days in advance of the anticipated filing date. 259 The filer instructs the EDGAR system as to the order of presentation of the segments, and submits the master segment last. EDGARs acceptance of the master segment triggers the construction of the filing from the master segment and previously submitted subordinate segments. The filing date of a segment filing will be the date upon which the filing is assembled and satisfies the requirements of Rule 12(a) of Regulation S-T. The electronic and microfiche copy of the filing and the Commissions official microfiche and any paper printouts will be complete filings.
If the filer identifies incorrectly the names of segments to be included in a filing, the filing will not be constructed. Electronic mail messages will be sent upon receipt of each segment. Imperfect segments will have to be resubmitted in their entirety.
As with modular submissions, all EDGAR filers that subscribe to the optional EDGAR electronic mail service may submit segmented filings. In contrast to modules, there is no limit to the size of any segment, nor to the number of segments which may be used to create a filing. Segments, however, are to be used only once and remain on the database only for six business days, after which time they will be removed.
Like modular submissions, segments do not constitute an official filing and are not deemed filed for purposes of the federal securities laws. However, once the filer submits the master segment for a particular filing, all applicable liability provisions of the federal securities laws apply to the newly created filing.
Modular submissions and segments not included in a filing will not be available to the public. 260 The Proposing Release indicated that the Commission may be required to release modules or segments to the public pursuant to a request under FOIA if an exemption under that Act is not available. The