The SEC on Feb. 21, 2023, decided to extend the filing deadline for Form 144, Notice of Proposed Sale of Securities, from 5:30 p.m. to 10 p.m. ET or EST, whichever is currently in effect, on commission business days on the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system.
To make the time change, the commission adopted an amendment to Regulation S-T, which describes general rules and regulations for electronic filing.
The final rule is in Release No. 33-11159, Extending Form 144 EDGAR Filing Hours.
The amendments become effective on March 20.
In a Feb. 22 statement, SEC Commissioner Mark Uyeda said that extending the deadline from 5:30 to 10 p.m. for when Form 144 is deemed filed is a “sensible change that eases the stress and burden on sellers (and their brokers, counsels, and other professionals), who must file Form 144 on the same day as placing their order to sell stock.” He explained that sometimes this need to file is not known until near the close of trading at 4:30 p.m. ET.
However, Uyeda said that he is worried about the SEC’s piecemeal approach to changing the EDGAR filing deadlines for its forms because not all forms have a 10 p.m. deadline. With the change, Form 144, Forms 3, 4, and 5, Schedule 14N and registration statements filed under Securities Act of 1933 will be the only forms with a 10:00 p.m. deadline.
The SEC’s February 2022 proposal that would cut the 10-day initial deadline for beneficial ownership reporting in half includes a proposed requirement that would change the filing deadline for Schedules 13D and 13G. The commission has yet to adopt the proposal in Release No. 33-11030, Modernization of Beneficial Ownership Reporting. (See SEC Proposes to Shorten Beneficial Ownership Reporting Deadline in the Feb. 16, 2022, edition of Accounting & Compliance Alert.)
The commission is planning to adopt the rules in Release No. 33-11030 this spring.
Uyeda’s views come as Feb. 23 marked the 30th anniversary of the commission’s rulemaking to implement EDGAR. But he pointed out that the current EDGAR framework was adopted in an era when most people worked at their company’s offices.
“Far more persons needing to make EDGAR filings are located around the world in different time zones,” Uyeda said. “In this current era of a 24-hour news cycle and remote work and work-from-anywhere, the Commission should reevaluate whether the current framework best serves filers and investors.”
He then urged the SEC to review its rules on EDGAR submission dates, hours and deadlines and get feedback from market participants.
In particular, he wanted thoughts on whether EDGAR should accept submissions on weekends and holidays, among other questions.
“The EDGAR system plays a key role in disseminating material information to the marketplace,” Uyeda said. “The lack of a future vision for the EDGAR system as it approaches its fourth decade is a disservice to investors and issuers alike.”
In the meantime, Release No. 33-11159 also includes some technical amendments to improve the consistency of revised provisions related to the filing format of Form 144.
This comes as the SEC in June 2022 adopted rule changes under Release No. 33-11070, Updating EDGAR Filing Requirements and Form 144 Filings that require 10 forms that were submitted in paper format to be filed electronically. (See SEC Finalizes Rules Requiring Electronic Filings for 10 Additional Forms in the June 7, 2022, edition of ACA.)
Before the rule changes, companies were able to submit Form 144 by snail mail or email.
In calendar year 2021, about 30,000 Forms 144 were filed, according to the June 2022 release.
“Although the vast majority (approximately 99%, or 29,700) of these Form 144 filings can be made electronically on EDGAR (because the issuer of the securities is subject to [Securities] Exchange Act [of 1934] reporting requirements), only 234 Form 144 filings were electronically filed on EDGAR. The remainder were filed in paper or as a PDF via email,” the SEC noted in Release No. 33-11070.
This article originally appeared in the Feb. 24, 2023 edition of Accounting & Compliance Alert, available on Checkpoint.
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