SEC Proposes Online Filing System for Section 16 Reports
December 18, 2002
Today, the U.S. Securities and Exchange Commission (SEC) authorized the issuance of a proposal for electronic filing of Section 16 reports. This proposal will offer Edgar filers the use of an online Edgar template covering each of the Section 16 reports (Forms 3, 4 and 5) to be filled out online and directly filed with the SEC. This template will permit footnotes and exhibits to be added to the filing. The SEC’s proposal, the details of which will be made available later this week, implements the requirements of Section 403 of Sarbanes-Oxley Act of 2002 mandating electronic filing by all Section 16 reporting persons and web posting for companies with corporate websites by no later than July 30, 2003. The SEC has indicated that it is in development of this software with its Edgar provider and anticipates having the software in place and electronic filing required sometime in the Spring of 2003 (i.e., earlier than required by the Sarbanes-Oxley Act).
The SEC proposal confirms that individual access codes will be required and that the issuer’s access codes cannot be used.
The SEC also invited competition from third-party service providers to the system the SEC is developing in hopes that electronic filing will be as "transparent and user friendly" as possible.
What this means to public companies (other than foreign private issuers) and their Section 16 reporting persons:
- If the company has not already obtained third party software, this means that it should consider waiting to see how effective the SEC will be in its development of its own Edgar software for this purpose. There will be no charge for using the SEC system.
- If the company has not already done so, it should immediately apply for individual access codes for its Section 16 reporting officers and directors. Note that some directors or officers may already have access codes if they are also reporting persons of other public companies.
