Three Silicon Valley firms, Cooley being one, have submitted a rulemaking petition to the SEC asking the SEC to amend Rules 11 and 302 of Reg S-T to allow the use of electronic signatures in SEC filings. Although the staff has granted some flexibility in connection with retention of manual signatures in its Statement Regarding Rule 302(b) of Regulation S-T in Light of COVID-19 Concerns, the petition contends that, given current health and safety requirements, “obtaining and retaining manual signatures in compliance with the Staff Statement remains a significant logistical burden.”
The petition observes that e-signatures are routinely used for any number of actions under the Delaware General Corporation Law, as well as multi-billion dollar corporate and commercial transactions. In addition, numerous state and federal courts have considered electronic signature processes of the type proposed to be effective in validating electronic signatures. And the impact of COVID-19 has “accelerated these trends and significantly increased the difficulties associated with obtaining manual ‘wet’ signatures.” In addition, the authors contend that “the massive transition to remote and disparate work environments during these unprecedented times will increase the business trends we were already witnessing and change the way commerce is conducted towards more virtual interactions, including executing transactions and agreements.”
Moreover, the petition continues, there have been many improvements in electronic signature software technology making it “possible to confirm…who has signed a document and when it was signed…, and mak[ing] recordkeeping and storage of such signatures seamless and secure.” The technology, the petition asserts, provides a level of confidence at least equal to the confidence ascribed to manual signatures.
While there appear to be many valid reasons to permit the use of e-signatures, the difficulties associated with providing manual signatures in the context of COVID-19 are certainly most prominent among them at the current moment. It remains to be seen whether the SEC decides to act on the petition.