Rule is issued to require hyperlinks to exhibits in regulatory filings

The SEC on March 1, 2017, published Release No. 33-10322, Exhibit Hyperlinks and HTML Format, shortly after approving the rule requiring public companies to include hyperlinks to the exhibits in the indexes of their regulatory filings.

The hyperlinks have to be incorporated into registration statements and quarterly and annual reports submitted through the SEC’s Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) filing system and formatted in the HyperText Markup Language (HTML). Companies will not be able to submit their filings using the American Standard Code for Information Interchange (ASCII) text format because it does not support hyperlinks.

The requirements will not apply to the electronic exhibits for asset-backed securities offerings filed with the SEC’s Form 10-D that link to information filed in a Form ABS-EE until the SEC has updated EDGAR to accommodate hyperlinks in the two forms, the rule release said. The requirements also do not apply to exhibits filed in the eXtensible Business Reporting language (XBRL).

The SEC said the requirements will become effective on September 1. Companies classified as nonaccelerated filers by Rule 12b-2 of the Securities Exchange Act of 1934., which means the value of the shares trading publicly is less than $75 million, and companies that are defined as smaller reporting companies in Rule 405 of the Securities Act of 1933 will not have to meet the requirements until Sept. 1, 2018.

Currently, investors who want to find exhibits to filings must check the exhibit index and search through the company’s previous filings to find and review the exhibit in EDGAR. The exhibits often supplement a company’s registration statement or quarterly and annual reports with information about a significant contract, tax opinion or merger.

With the new requirement, investors will be able to click on the hyperlink without having to do searches in previous filings to get to an exhibit.

Release No. 33-10322 amends Item 601 of Regulation S-K, which governs exhibits to regulatory filings. The final rules also amend Rule 102 and Rule 105 of Regulation S-T, which set rules for submitting electronic filings. Rule 102 deals with exhibits, and Rule 105 explains the limits on the use of HTML linking in a filing submitted to EDGAR.

The rule finalizes proposed changes in Release No. 33-10201, Exhibit Hyperlinks and HTML Format, from August 2016. The SEC said comment letters “overwhelmingly” supported the change.

The SEC decided in Release No. 33-10322 not to require companies to refile electronically any paper-based exhibit so that hyperlinks can be used. The SEC did not propose but asked about the switch in Release No. 33-10201.

Some investors said in comment letters that it would be beneficial if organizational documents, such as certificates of incorporation, were made available on EDGAR. However, some business groups said requiring companies to refile paper exhibits in an electronic format will raise costs.

“In our experience, only a limited number of registrants have not electronically filed their articles of incorporation or by-laws, and we are mindful of commenters’ concerns about imposing additional compliance burdens,” the SEC said in Release No. 33-10322, in explaining the decision.

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