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SEC Adopts Rules Requiring EDGAR-Filed Electronic Form 144 Notices and “Glossy” Annual Reports

Siddharth Bahl

  585.231.1484

  sbahl@hselaw.com

On June 3, 2022, the Securities and Exchange Commission (the “SEC”) adopted amendments that eliminate certain paper filings and instead will require electronic filings via the EDGAR system.

When the rules are effective, Rule 101 of Regulation S-T will be amended to require public companies to electronically file:

  • “Glossy” Annual Reports (in pdf form);
  • Form 144 notices for sales of securities of issuers subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended; and
  • Form 11-K annual reports for employee stock purchase, savings, and similar plans (including all required Inline XBRL for the financial statements and accompanying notes).

“Glossy” Annual Reports

For most companies that already post a pdf file of their “Glossy” Annual Report on their websites, this new filing requirement will add a simple step to their annual meeting process. Companies using the “notice and access” model for distribution of their proxy materials should note that they will still be required to publish the “Glossy” Annual Report on a website other than the SEC’s EDGAR website. The amended rule will require that the electronically submitted “Glossy” Annual Report capture the graphics, styles of presentation, and prominence of disclosure (including text size, placement, color, and offset, as applicable) contained in the reports. The reports should not be re-formatted, re-sized, or otherwise re-designed for purposes of the EDGAR submission. Currently, pdf is the only file format that the EDGAR system supports but if it is upgraded in the future to accommodate other formats, the SEC will communicate that upgrade by adopting an updated EDGAR Filing Manual.

Rule 144 Notices

The SEC will be providing a fillable online form for Form 144 notices, and companies should consider implementing procedural changes to ensure such notices are timely prepared and filed. Companies and others who file such notices should ensure in advance that they have active EDGAR codes for any person who may be required to file a Form 144 notice.

According to the SEC, of the approximately 30,000 Form 144 notices filed in 2021, only 234 (or about 0.8%) were submitted electronically on EDGAR, with the rest submitted in paper form. Under the existing rules, the paper filings are typically only available for public access in person at the SEC (which means that about 99% of the Form 144 notices filed in 2021 were largely unavailable to the public). Under the amendments, Rule 144 notices will be immediately available for public access via EDGAR. Additionally, the amendments remove the requirement that a copy of the Form 144 notice be sent to the principal national securities exchange because that requirement was designed for paper Form 144 filings.

Form 11-K Annual Reports

The amendments mandate the use of Inline XBRL for the filing of financial statements and accompanying schedules to the financial statements required by Form 11-K. These amendments are consistent with the Inline XBRL requirements for financial information contained in annual reports on Form 10-K and quarterly reports on Form 10-Q. The SEC expects this new requirement to enable the SEC, plan participants, and analysts to more efficiently access, organize, and evaluate the information contained within Form 11-K annual reports.

Effectiveness of Amendments

The new rules generally became effective July 11, 2022. There is an additional six-month transition period for electronic filings of “Glossy” Annual Reports and Form 11-K annual reports (with an additional three years for compliance with Inline XBRL requirements). As a result, “Glossy” Annual Reports will need to be electronically filed for the 2023 proxy season. Electronic filing of Form 144 notices will be required six months after the publication in the Federal Register of the SEC’s release that adopts the new version of the EDGAR Filer Manual addressing electronic filings of Form 144 to allow time for companies and others to implement any needed procedural changes. The new version of the EDGAR Filer Manual is currently expected in September 2022, which means the new Form 144 notice filing requirement could be effective as early as March 2023.

The SEC’s public statement announcing the approval of the new rules is available here and the final rule is available here.

If you have any questions about these amendments, please contact a member of Harter Secrest & Emery’s Securities and Capital Markets group at 585.232.6500 or 716.853.1616.

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