Extending Form 144 EDGAR Filing Hours

AGENCY:

Securities and Exchange Commission.

ACTION:

Final rule.

SUMMARY:

We are adopting an amendment to Regulation S-T to extend the filing deadline for Form 144 from 5:30 p.m. to 10 p.m., Eastern Standard Time or Eastern Daylight Saving Time, whichever is currently in effect, on Commission business days. We are also adopting technical amendments to enhance the consistency of recently revised provisions related to the filing format of Form 144.

DATES:

Effective date: The amendments are effective on March 20, 2023.

FOR FURTHER INFORMATION CONTACT:

Mark W. Green, Senior Special Counsel, Office of Rulemaking, Division of Corporation Finance at (202) 551-3430.

SUPPLEMENTARY INFORMATION:

We are adopting amendments to:

I. Discussion

On June 2, 2022, the Commission adopted rule and form amendments to mandate the electronic filing on EDGAR of Forms 144 reporting the sale of securities of issuers subject to the reporting requirements of section 13 or 15(d) of the Exchange Act (“reporting issuers”). The Electronic Filing Release provides that the requirement to file Form 144 electronically regarding reporting issuers will begin six months after the date of publication in the Federal Register of the Commission release that adopts the version of the EDGAR Filer Manual addressing updates to Form 144. The Commission adopted that version of the EDGAR Filer Manual on September 19, 2022, and the Federal Register published it on October 13, 2022. Accordingly, the Commission issued an announcement stating that the electronic filing requirement will begin on April 13, 2023.

Under current rules, a Form 144 submitted by direct transmission after 5:30 p.m. is deemed filed the next business day. Section 17 CFR 232.13(a)(2) (“Rule 13(a)(2)” of Regulation S-T) provides that, subject to specified exceptions, a filing that meets stated basic requirements, submitted by direct transmission:

• No later than 5:30 p.m., will be deemed filed on the same business day; and

• After 5:30 p.m., will be deemed filed the next business day.

Title 17 CFR 232.13(a)(4) (“Rule 13(a)(4)”) provides that, notwithstanding Rule 13(a)(2), a Form 3, 4, or 5 or Schedule 14N submitted by direct transmission on or before 10:00 p.m. will be deemed filed on the same business day. When the Commission mandated electronic filing of Forms 3, 4, and 5 in 2003, it stated that its “objective . . . is to create a system that insiders can use relatively easily themselves” and “agree[d with commenters] that extended filing hours would ease filers' administrative burdens, without impairing prompt public availability of the filed information.” Similarly, when the Commission adopted Schedule 14N in 2010, it cited administrative considerations and added Schedule 14N to the list of filing types with extended filing hours in Rule 13(a)(4).

The Commission is similarly sensitive to the effort required to electronically file a Form 144. Accordingly, the Commission noted in the Electronic Filing Release that Form 144 filers will benefit from “planned changes to make [Form 144] an online fillable document that would facilitate electronic filing”. In a further effort to facilitate electronic filing of Form 144, we are now amending Rule 13(a)(4) to include Form 144. As a result, upon effectiveness of these amendments, a Form 144 that otherwise complies with applicable filing requirements that is submitted by direct transmission after 5:30 p.m., but no later than 10:00 p.m., will be deemed filed the same business day.

EDGAR will be updated to include Forms 144 and 144/A among the submission types that EDGAR will accept and disseminate on the same day if the submissions are made from 6:00 a.m. to 10:00 p.m. We expect these updates to be completed on or about March 20, 2023, and disclosed in the Commission release that adopts the version of the EDGAR Filer Manual addressing the extended filing hours for Form 144.

In addition to amending the Form 144 filing deadline, we are making two technical amendments. First, we are amending three provisions to correct errors about the time period during which filings made by direct submission may be submitted to the Commission. In particular, we are correcting errors in 17 CFR 230.110(c) (“Rule 110” under the Securities Act), 240.0-2(c) (“Rule 0-2(c)” under the Exchange Act), and 260.0-5(c) (“Rule 0-5(c)” under the Trust Indenture Act) by conforming them to 17 CFR 232.12(c) (“Rule 12(c)” of Regulation S-T) and Section 2.3.1 of the EDGAR Filer Manual. Rules 110(c), 0-2(c), and 0-5(c) currently provide that filings made by direct transmission may be submitted to the Commission each business day, from “8 a.m. to 10 p.m.” In fact, filings may be submitted starting at 6 a.m. Consequently, we are revising Rules 110(c), 0-2(c), and 0-5(c) to replace “8 a.m.” with “6 a.m.”

Second, we are reinstating the Regulation S-T-based requirement for paper filings of Form 144 for non-reporting issuers that was inadvertently removed in the Electronic Filing Release. Before the Commission issued the Electronic Filing Release, then 17 CFR 232.101(c)(6) (“Rule 101(c)(6)” of Regulation S-T) provided that a filer must file in paper “[f]ilings on Form 144 . . . where the issuer is [a non-reporting issuer].” The preamble of the Electronic Filing Release noted that the Commission was not adopting an earlier proposal to eliminate the Form 144 filing requirement in regard to non-reporting issuers and “[a]s such affiliates relying on Rule 144 [in regard to a non-reporting issuer] will still be required to file a notice of sale on Form 144 in paper form pursuant to Rule 101(c)(6) of Regulation S-T and Rule 144.” The regulatory text section of the Electronic Filing Release, however, inadvertently removed and reserved Rule 101(c)(6). Consequently, we are reinstating it in this release to correct this inadvertent omission. In addition, the regulatory text section of the Electronic Filing Release amended 17 CFR 239.144 to provide for electronic filing of Form 144 and inadvertently failed to provide for the continued paper filing for non-reporting issuers. Accordingly, we are amending paragraph (a) of 17 CFR 239.144 to clarify that Form 144 must be filed electronically in regard to reporting issuers and in paper in regard to non-reporting issuers.

II. Procedural and Other Matters

The Administrative Procedure Act (“APA”) generally requires an agency to publish notice of a rulemaking in the Federal Register and provide an opportunity for public comment. This requirement does not apply, however, to rules of agency organization, procedure, or practice, or if the agency “for good cause finds . . . that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.” We find that these amendments relate to agency procedures or practice and do not substantially alter the rights and obligations of non-agency parties. We also find that notice and comment are unnecessary because the amendments merely (i) extend from 5:30 p.m. to 10:00 p.m. the latest time by which a Form 144 submitted by direct transmission is deemed filed the same business day; and (ii) make technical corrections. It follows that the amendments do not require analysis under the Regulatory Flexibility Act or a Report to Congress under the Small Business Regulatory Enforcement Fairness Act.

The APA generally requires that an agency publish an adopted rule in the Federal Register at least 30 days before it becomes effective. This requirement, however, does not apply if the agency finds good cause for making the rule effective sooner. For the same reasons as we are forgoing notice and comment, we find good cause to make these amendments effective on March 20, 2023. We believe that as soon as practicable (i) electronic filers should be able to submit a direct transmission of a Form 144 as late as 10:00 p.m. and have it deemed filed the same business day; and (ii) technical corrections should be in place. We therefore find there is good cause for these amendments to take effect on March 20, 2023. We also believe that the amendments regarding the submission timing for Form 144 relieve a restriction on an electronic filer by providing more time for a direct transmission of a Form 144 to be deemed filed the same business day.

If any of the provisions of these rules, or the application thereof to any person or circumstance, is held to be invalid, such invalidity shall not affect other provisions or application of such provisions to other persons or circumstances that can be given effect without the invalid provision or application.

III. Paperwork Reduction Act

Certain provisions of our rules and forms contain “collection of information” requirements within the meaning of the Paperwork Reduction Act of 1995 (“PRA”). An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information requirement unless it displays a currently valid Office of Management and Budget (OMB) control number. Compliance with the information collections is mandatory. Responses to the information collections are not kept confidential and there is no mandatory retention period for the information disclosed.

As noted above, the amendments do not substantively alter the Form 144 (OMB Control Number 3235-0328) electronic filing requirements, but rather merely (i) extend from 5:30 p.m. to 10:00 p.m. the latest time by which a filer can submit a direct transmission of a Form 144 to have it be deemed filed the same business day; and (ii) make technical corrections. This change in timing does not change the information collection burden and therefore we are not revising any burden and cost estimates in connection with these amendments.

IV. Economic Analysis

We are mindful of the costs imposed by, and the benefits to be obtained from, our rules. Section 2(b) of the Securities Act and section 3(f) of the Exchange Act require the Commission, whenever it engages in rulemaking and is required to consider or determine whether an action is necessary or appropriate in the public interest, to consider, in addition to the protection of investors, whether the action would promote efficiency, competition, and capital formation. Section 23(a)(2) of the Exchange Act also requires the Commission to consider the impact that the rules would have on competition and prohibits the Commission from adopting any rule that would impose a burden on competition not necessary or appropriate in furtherance of the Exchange Act.

On June 2, 2022, the Commission adopted rule and form amendments to mandate the electronic filing on EDGAR of Form 144 in regard to the sale of securities of reporting issuers. To further facilitate electronic filing of Form 144, we are now adopting amendments that will—in addition to making certain technical corrections —deem a Form 144 that is submitted by direct transmission after 5:30 p.m. but not later than 10:00 p.m. to be filed the same business day, rather than on the following business day (“same-day filing amendment”). The same-day filing amendment will apply to all electronic filings of Form 144, though many of these filings may be submitted on or before 5:30 p.m. on the filing date. Although we believe the impact of the same-day filing amendment on Form 144 is likely to be marginal, we expect that this amendment will result in some benefits to market participants, including Form 144 filers and those who use information disclosed in Form 144, without imposing substantial costs. In addition, we do not expect any significant changes to efficiency, competition, or capital formation as a result of the extended hours for same-day filing treatment.

We believe that the same-day filing amendment will provide some benefits to market participants. Extending the filing hours to 10:00 p.m. could benefit those involved with the filing process as they will gain extra time to prepare and submit filings, without impacting the filing date. The Commission stated in the Electronic Filing Release its understanding that most filers prepare and file Form 144 individually or with assistance of a broker or personal counsel. The extended filing hours could also limit these filing process participants' need to outsource the filing process to other parties, which may add costs to the filing process. Additionally, extending the filing hours could improve the quality of filings by reducing the need to rush to complete them. The likely improved quality of filings could benefit those who use the information disclosed in Form 144.

We also do not believe that the same-day filing amendment will impose substantial costs on market participants that use the information disclosed in the forms. As discussed in the Electronic Filing Release, a benefit of electronic filings is faster and more efficient access to the filed documents, which facilitates the flow of information to market participants from affiliates of reporting issuers. Allowing filers more time to file (four and a half hours longer) each day might create some delay in some market participants' access to these documents. However, we do not expect this extension will reduce these benefits significantly. First, this extension extends the filing deadline only from 5:30 p.m. to 10:00 p.m. Not all of the filers are likely to take the option to file after 5:30 p.m. Second, to the extent that filers take advantage of the extended filing hours, we do not believe that the delay in access to the filed documents will lead to a loss in information or significant reduction in the value of the information for investors because the extension of the filing deadline to 10:00 p.m. at the latest, still allows investors to review the filings well before the stock exchanges open the next day. We do not believe investors who may use the information from these filings to trade will be negatively affected by the delay. In fact, the extra time might provide filers with opportunities to check their filings carefully, thus improving the accuracy of the submitted information.

V. Statutory Authority

The amendments contained in this document are being adopted under the authority set forth in sections 4, 6, 7, 8, 10, 19(a), and 28 of the Securities Act, sections 3, 12, 13, 14, 15, 15B, 16, 23, and 35A of the Exchange Act, and section 319 of the Trust Indenture Act of 1939.

List of Subjects in 17 CFR Parts 230, 232, 239, 240, and 260

• Reporting and recordkeeping requirements
• Securities

Text of Final Rule and Form Amendments

In accordance with the foregoing, the Commission amends title 17, chapter II of the Code of Federal Regulations as follows:

PART 230—GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933

1. The general authority citation for part 230 continues to read as follows:

Authority: 15 U.S.C. 77b, 77b note, 77c, 77d, 77f, 77g, 77h, 77j, 77r, 77s, 77z-3, 77sss, 78c, 78d, 78j, 78 l, 78m, 78n, 78 o, 78 o -7 note, 78t, 78w, 78 ll (d), 78mm, 80a-8, 80a-24, 80a-28, 80a-29, 80a-30, and 80a-37, and Pub. L. 112-106, sec. 201(a), sec. 401, 126 Stat. 313 (2012), unless otherwise noted.

2. Amend § 230.110 by revising paragraph (c) to read as follows:

PART 232—REGULATION S-T—GENERAL RULES AND REGULATIONS FOR ELECTRONIC FILINGS

3. The general authority citation for part 232 continues to read as follows:

Authority: 15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s(a), 77z-3, 77sss(a), 78c(b), 78 l, 78m, 78n, 78 o (d), 78w(a), 78 ll, 80a-6(c), 80a-8, 80a-29, 80a-30, 80a-37, 80b-4, 80b-6a, 80b-10, 80b-11, 7201 et seq.; and 18 U.S.C. 1350, unless otherwise noted.

4. Amend § 232.12 by revising paragraph (c) to read as follows:

5. Amend § 232.13 by revising paragraph (a)(4) to read as follows:

6. Amend § 232.101 by revising paragraph (a)(1)(xxvii) and adding paragraph (c)(6) to read as follows:

PART 239—FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933

7. The general authority citation for part 239 continues to read as follows:

Authority: 15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 77sss, 78c, 78 l, 78m, 78n, 78o(d), 78o-7 note, 78u-5, 78w(a), 78 ll, 78mm, 80a-2(a), 80a-3, 80a-8, 80a-9, 80a-10, 80a-13, 80a-24, 80a-26, 80a-29, 80a-30, 80a-37, and sec. 71003 and sec. 84001, Pub. L. 114-94, 129 Stat. 1321, unless otherwise noted.

8. Amend § 239.144 by revising paragraph (a) to read as follows:

PART 240—GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 1934

9. The general authority citation for part 240 continues to read as follows:

Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5,78d, 78e, 78f, 78g, 78i, 78j, 78j-1, 78j-4, 78k, 78k-1, 78 l, 78m, 78n, 78n-1, 78o, 78o-4, 78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78dd, 78 ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, 7201 et seq., and 8302; 7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C. 1350; and Pub. L. 111-203, 939A, 124 Stat.1376 (2010); and Pub. L. 112-106, sec. 503 and 602, 126 Stat. 326 (2012), unless otherwise noted.

10. Amend § 240.0-2 by revising paragraph (c) to read as follows:

PART 260—GENERAL RULES AND REGULATIONS, TRUST INDENTURE ACT OF 1939

11. The authority citation for part 260 continues to read as follows:

Authority: 15 U.S.C. 77c, 77ddd, 77eee, 77ggg, 77nnn, 77sss, 78 ll (d), 80b-3, 80b-4, and 80b-11, unless otherwise noted.

12. Amend § 260.0-5 by revising paragraph (c) to read as follows: