Last year, the SEC introduced updated filing requirements for numerous form types filed on EDGAR, mandating in many rules that compliance documents be filed in a structured data format. For those looking to refresh their memories, you can read our blog from October 2022 titled, “What is Form 144?” Since this posting, there have been significant updates. Most notedly is the April 13 implementation date, which means that all “affiliates” impacted by Form 144 filing rules must begin preparing now.
As always, the DFIN team is ready to help. If you’re a corporation or affiliate that falls under the Form 144 requirement, here are five steps we think will help you establish the necessary level of preparedness.
First: Talk to your affiliates and make sure you know exactly who they are and understand the conditions they must meet to sell company securities. As a quick refresher, Rule 144 of the Securities Act governs the conditions an affiliate of the reporting company must meet in order to sell company securities, one of which includes a notice on Form 144 in the connection with any sale of company securities. Most notable is that all company affiliates must file Form 144 at the time they place a sell order with a broker, and they must be prepared to file the Form 144 electronically on the EDGAR system in a structured data format.
Second: As you prepare for your first electronic filing using the new EDGAR structured data specifications, keep in mind that you cannot complete the process without EDGAR Filing Codes. It’s likely that some affiliates may have a CIK, but not the rest of the EDGAR codes. It’s critical to be prepared and you must consider submitting SEC Form ID for each entity or person who does not yet have EDGAR filing codes. For any company that is not sure, call the DFIN team. With deep EDGAR experience, we will file Form ID with the SEC and ensure you receive the right EDGAR codes. We will also assist with your first filing to ensure you are in complete compliance.
Third: Have conversations with your affiliates’ brokers about SEC EDGAR filing responsibilities and designate who will execute these EDGAR Filings in the structured data format. For some affiliates, the process may stay with affiliate brokers who will continue to file Form 144, only now using the EDGAR Structured data system, rather than submitting in paper format. For others, it may shift to someone else within the company’s inside or outside counsel. Look into this immediately to ensure that access is set up well in advance for the April 13 date.
Fourth: Familiarize yourself with the new EDGAR filing structured data form. You can find a copy in the updated EDGAR Filer Manual. You will notice that while the paper forms allowed for a very broad determination of what could be reported, the EDGAR structured data versions are far less accommodating. These new EDGAR structured data Form 144s require the inclusion of very specific information, which must be complete, consistent, and accurate.
Fifth: Develop a set of procedures that will work with the company, your affiliates, and brokers, along with a detailed timeline to ensure compliance with Form 144. This will help you avoid any missteps along the way.
April 13 is quickly approaching, and the time to act is now! Let DFIN provide you with critical insight on what this means for your company and affiliates, so that everyone involved can be prepared.