If you have ever had to search for an exhibit originally filed with the SEC years ago, you know it can take forever, particularly when the exhibit consists of an original document that has been amended several times, each amendment having been separately filed.
You will soon have to search no more, because the SEC is about to make it easier for you. On March 1, the SEC adopted a final rule requiring public companies to include a hyperlink to each exhibit listed in the exhibit index to all filings subject to Item 601 of SEC Regulation S-K. The rule will take effect on September 1 for most companies. (“Smaller reporting companies” and companies that are neither “large accelerated filers” nor “accelerated filers” and that submit filings in ASCII get a one-year reprieve.)
The new rule is rather straightforward, but there are a few wrinkles of note:
- Early adoption: Early adoption is encouraged, but it is unclear whether partial early adoption is permissible. In other words, if you comply early, must you comply as to all exhibits in all filings?
- Registration statements: As proposed, the rule contemplated that hyperlinks would only be required for the registration statement that actually goes effective. In response to comments, the SEC has decided to require hyperlinks in the initial registration statement and each subsequent pre-effective amendment.
- Paper exhibits: The final rule does not require that paper exhibits be refiled electronically, on the grounds that very few exhibits fall into this category.
- Glitches: Companies must correct nonfunctioning hyperlinks and hyperlinks to the wrong exhibit. However, the inaccurate hyperlink would not render the filing materially deficient, nor would it be deemed late (so as to impact the ability to use short-form registration statements).
- External hyperlinks: The adopting release reminds companies that EDGAR does not accept documents containing web addresses that link to external websites.
While September 1 seems far away, it will be here before you know it. Companies – particularly those with exhibits filed years ago – would be well advised to start the process of locating their exhibits now to avoid last-minute problems.