Rulemaking for EDGAR System and Adoption of Updated EDGAR Filer Manual; Final Rules SECURITIES AND EXCHANGE COMMISSION

Federal RegisterDec 30, 1994

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SUMMARY: In order to fully implement the Electronic Data Gathering,

Analysis, and Retrieval (``EDGAR'') system, the Securities and Exchange

Commission (``Commission'') is making final its interim rules governing

mandated electronic filing. These rules will become applicable to all

domestic registrants, and third party filers who file with respect to

those registrants, as they are phased in pursuant to a modified phase-

in schedule. The Commission also is adopting certain technical and

clarifying amendments to the EDGAR rules.

EFFECTIVE DATE: The EDGAR interim rules are made final as amended in

this document, effective January 30, 1995.

FOR FURTHER INFORMATION CONTACT: In the Division of Corporation

Finance, Barbara C. Jacobs, James R. Budge or Joseph P. Babits, Office

of Disclosure Policy at (202) 942-2910 (for issues involving the EDGAR

rules) and Sylvia J. Reis or Serena C. Swegle, CF EDGAR Policy, at

(202) 942-2940 (for EDGAR questions generally). In the Division of

Investment Management, Anthony A. Vertuno or Ruth Armfield Sanders,

EDGAR IM Project, at (202) 942-0591 (for Division of Investment

Management filings) or Richard T. Miller, Office of Public Utility

Regulation, at (202) 942-0545 (for filings under the Public Utility

Holding Company Act of 1935).

SUPPLEMENTARY INFORMATION: The Commission today is making final the

interim rules governing the submission of documents filed via the EDGAR

system, effective January 30, 1995, which will be made applicable to

all domestic registrants and parties making filings with respect to

those registrants (``third party filers'') in accordance with an

updated phase-in schedule. This action is being taken to fully

implement mandated electronic filing in light of the experience of the

staff since the interim rules implementing the EDGAR system were

adopted in February 1993.\1\ The Commission also is adopting minor and

technical amendments, as proposed in July 1994,\2\ to the electronic

filing provisions in Regulation S-B,\3\ Regulation S-K,\4\ the Rules

and Regulations\5\ under the Securities Act of 1933 (``Securities

Act''),\6\ Regulation PS-T,\7\ the Forms under the Securities Act,\8\

the Rules, Regulations and Schedules\9\ under the Securities Exchange

Act of 1934 (``Exchange Act''),\10\ the Forms under the Exchange

Act,\11\ the Rules\12\ and Forms\13\ under the Public Utility Holding

Company Act of 1935 (``Public Utility Act''),\14\ and the Rules\15\

under the Trust Indenture Act of 1939 (``Trust Indenture Act'').\16\

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\1\The EDGAR rules were adopted in four releases: Release No.

33-6977 (February 23, 1993) [58 FR 14628] (containing a general

description of the EDGAR system, Regulation S-T (the electronic

filing regulation) [17 CFR Part 232], and the rules applicable to

filings processed by the Division of Corporation Finance); Release

No. IC-19284 (February 23, 1993) [58 FR 14848] (relating to rules

specific to investment companies and institutional investment

managers); Release No. 35-25746 (February 23, 1993) [58 FR 14999]

(relating to rules specific to public utility holding companies);

and Release No. 33-6980 (February 23, 1993) [58 FR 15009]

(instructions for filing fees).

\2\Release No. 33-7074 (July 8, 1994) [59 FR 36265].

\3\17 CFR Part 228.

\4\17 CFR Part 229.

\5\17 CFR Part 230.

\6\15 U.S.C. 77a et seq.

\7\17 CFR Part 232.

\8\17 CFR Part 239.

\9\17 CFR Part 240.

\10\15 U.S.C. 78a et seq.

\11\17 CFR Part 249.

\12\17 CFR Part 250.

\13\17 CFR Part 259.

\14\15 U.S.C. 79a et seq.

\15\17 CFR Part 260.

\16\15 U.S.C. 77aaa et seq.

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I. Background

In 1987, Congress enacted Section 35A of the Exchange Act, which

requires the Commission to certify to the Congress that it will not

adopt any rule requiring electronic filing by all registrants until

mandatory electronic filings from a significant test group of

registrants have been received and reviewed by the Commission for a

period of at least six months.\17\ The Commission so certified in a

letter to the House Committee on Government Operations dated December

27, 1988. Following the conclusion of a successful voluntary pilot

electronic filing program,\18\ in February 1993, the Commission adopted

interim rules governing mandated electronic filing to begin

implementation of the operational EDGAR system\19\ Those rules consist

of Regulation S-T, the regulatory cornerstone of the Commission's

electronic filing framework, and a number of related provisions in the

Commission's rules, schedules and forms.

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\17\15 U.S.C. 78ll(c)(5).

\18\Development of an electronic disclosure system was

undertaken by the Commission in 1983, and construction of a pilot

system to develop and test an electronic system was commenced in May

1984. The first filings were received on the pilot system on

September 24, 1984, and through its closing, the Commission received

over 116,000 electronic filings from over 1,800 filers. On July 14,

1992, the pilot project was closed and replaced by the operational

EDGAR system, with the pilot participants continuing as volunteers

on the new system.

\19\See n., above.

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On April 26, 1993, the date the interim rules became effective,\20\

the first of the participants in the Congressionally-mandated

significant test group became subject to mandated electronic filing.

Additional participants were phased in until December 1993, when the

significant test group, consisting of approximately 3,500 filers, was

complete.\21\ In keeping with the Commission's certification to

Congress, no additional registrants were phased in to mandated

electronic filing after that point, although a number of registrants

voluntarily became electronic filers since the formation of the

significant test group. Approximately 39,790 live filings and 23,335

test submissions were received by EDGAR during the six-month

significant test period (January 1 through June 30, 1994). As discussed

below, an evaluation of the significant test period was conducted in

order to determine whether the staff should recommend that the

Commission make the interim rules final and applicable to all

registrants, as planned, including those in the significant test group,

and proceed with the phase-in process.

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\20\The Financial Data Schedule provisions were implemented on

September 1, 1994. See Release No. 33-7072 (July 8, 1994) [59 FR

36258]. Financial Data Schedules are exhibits that contain financial

information extracted or derived from financial data within a filing

that is marked to allow electronic manipulation of such information.

For a complete discussion of Financial Data Schedules, see Release

No. 33-7072, Section IV.D of Release No. 33-6977, Section IV.D of

Release No. IC-19284, and Section IV of Release No. 35-25746.

\21\The test group includes about 1000 investment company filers

who, because some of them issue many separately registered series,

account for approximately 8,500 individual registrants.

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II. Full Implementation of the EDGAR System

While Congress required the Commission only to certify that filings

from the significant test group would be received and reviewed for a

period of six months before mandating electronic filing for all

registrants, a comprehensive study of the significant test period

results was undertaken by the Office of Information Technology

(``OIT'') to form the basis of a recommendation to the Commission as to

whether implementation of EDGAR should proceed. In addition to the

information gathered internally, OIT sponsored a two-day EDGAR Filer

Conference in April 1994 devoted in large part to learning the public's

views on the success of the EDGAR system and discussing its future.

Comment on the system also was solicited in the Federal Register.\22\

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\22\Release No. 34-34148 (June 2, 1994) [59 FR 29837]. Comment

letters are available for inspection and copying in the public

reference room at the Commission's headquarters (File No. S7-18-94).

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OIT has coordinated the evaluation of data and public comments and

prepared a report to the Commission that encompasses a broad spectrum

of issues.\23\ The system's integrity, reliability, responsiveness,

stability, security, capacity and other criteria were evaluated. The

report indicates that each area of consideration satisfies or exceeds

the requirements necessary to mandate electronic filing by all domestic

registrants and third party filers. The system, including EDGARLink,

the filer assistance software, is accessible to a broad base of filers

at reasonable cost and can be enhanced to meet future needs of filers

and users of the information as they arise. Electronic filings made by

the significant test group have provided a suitable alternative to

paper filings both to the staff and other users, with filings

consistently being disseminated in the same form as submitted to the

Commission. Finally, the report concludes that provision of information

through the EDGAR system is at least as efficient and effective as in

the paper filing system; in the case of dissemination, the broadcast of

material information is greatly enhanced, with electronic filings being

made available nationwide, if not worldwide, in a matter of minutes.

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\23\The report is available for inspection and copying in the

public reference room at the Commission's headquarters.

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Some interested parties have expressed the view that the EDGAR

system's current design is no longer state-of-the-art and that it

should be reconfigured before phase-in recommences to reflect the

newest available technologies that would allow for the preparation and

retrieval of filings that look more like traditional typeset paper

filings, including graphic and image material. The EDGAR project is,

and always will be, dynamic in character. Some modifications already

are under consideration and the Commission and staff will be vigilant

in the ongoing evaluation of the system to make it as accessible and

easy to use as possible. However, the staff reports that the current

design successfully achieves Congress' and the Commission's goal of

immediate electronic access to the vital information required to be

disclosed pursuant to the federal securities laws and regulations, and

that further costs and delays to overhaul a system that is currently

functioning well are not now warranted.

While not recommending the complete replacement of the EDGAR

design, some public commenters have voiced concerns about other

perceived weaknesses in the current system. Some argued that EDGARLink

is not as user-friendly as it should be, or that it should be available

for use with other types of system platforms or with networks. Others

asserted that the procedures for payment of filing fees to the lockbox

depository, while not technically an EDGAR issue, sometimes affects the

timeframe for acceptance of EDGAR filings. Some filers assert that too

much electronic tagging is required, while some disseminators advocate

the addition of more tagging. The report states that the most pressing

concerns have been given a high priority, and solutions have already

been implemented or are underway; future needs for enhancements and

design changes will be addressed in due course. Again, while these

concerns are taken seriously, they do not approach a level, either

individually or collectively, that merits further delay in fully

implementing the electronic filing program.

In view of the foregoing, and based on the recommendations of the

staff, the Commission announces that the interim EDGAR rules adopted in

February 1993, as amended, are hereby made final and applicable to all

domestic registrants and third parties filing with respect to those

registrants. Division of Corporation Finance and Investment Management

filers will be phased in in accordance with the phase-in schedule

attached as Appendix A. An updated comprehensive phase-in list of

Corporation Finance registrants also is provided as Appendix B,\24\ and

a revised phase-in list for filers whose documents are processed by the

Division of Investment Management is included as Appendix C.\25\ Phase-

in will recommence with Groups CF-05 and IM-03, whose filings made on

or after January 30, 1995 will be required to be made electronically,

as governed by Regulation S-T.\26\ Subsequent phase-in groups will

become subject to mandated electronic filing, as provided in the

revised phase-in schedules.\27\ As is true with all rules promulgated

by the Commission, all persons making filings with the Commission,

including those making third-party filings with respect to electronic

registrants, are responsible for apprising themselves of their new

obligations associated with filing on the EDGAR system. While the staff

attempts to contact registrants in each phase-in group by furnishing a

copy of the EDGAR Filer Manual and EDGARLink software prior to phase-

in, filers will not be relieved of their electronic filing obligations

in the absence of such notification.

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\24\A number of changes to the phase-in lists originally

published with Release Nos. 33-6977 and IC-19284 have been made to

reflect name changes, mergers, requests to participate in a

different phase-in group and other changes. These changes have been

published periodically in the SEC News Digest and in the Federal

the significant test group as well as for all subsequent groups in

order to inform third party filers of their obligation to file

electronically once the subject company becomes an electronic filer.

As explained in Release No. 35-25746, public utility holding

companies are phased in for purposes of filing under the Public

Utility Act at the time they are phased in for filings made pursuant

to the Securities Act and the Exchange Act, which phase-in date is

governed by the Corporation Finance phase-in list. All subsidiary

companies are phased-in along with the holding company. Public

utility filers that do not file Securities Act or Exchange Act

filings and that are not part of a holding company system previously

phased in will begin electronic filing when the last group of

registrants is phased in.

\25\Investment company filers not named in Appendix C must

determine their phase-in date from paragraph (b) of Rule 902 of

Regulation S-T [17 CFR 232.902(b)]. The rule provides that if a

registrant is part of a complex that has been phased in, it will be

phased in with the complex based on the investment adviser in the

case of management investment companies, the depositor in the case

of unit investment trusts, or the principal underwriter in the case

of internally managed closed-end funds. Thus, a newly created fund

that is part of a phased-in complex will be required to make its

submissions electronically. Similarly, if a fund that is not phased

in changes its investment adviser to one that advises funds in a

phased-in complex, it will be required to begin filing

electronically after the new advisory relationship becomes

effective. However, in order to avoid interrupting the availability

of information in electronic format for phased-in filers, after a

fund is phased in, it will continue to file electronically even if

it changes its investment adviser to one advising investment

companies not yet phased in. Investment companies that are not named

in Appendix C and that are not associated with a phased-in complex

will be phased in in the last group.

Some funds have more than one adviser. A registrant is deemed to

have the same adviser as another fund with the same adviser except

in cases where the common adviser is only a sub-adviser of one of

the registrants. See paragraph (b)(3) of Rule 902 of Regulation S-T

[17 CFR 232.902(b)(3)].

In some cases, the assignment of an investment company based on

investment adviser may be inappropriate. For example, the sponsor of

a complex might form a ``private-label fund'' for the customers of a

specific financial institution. This fund may use the financial

institution as its investment adviser but have the same distributor

and administrator as other funds in the complex. In that case, the

registrant could request reassignment to the phase-in group that

includes most of the investment companies using the same distributor

or administrator. See n. 27, below.

\26\Concurrently with this release, the Commission is adopting a

revised EDGAR Filer Manual in connection with an EDGAR system

upgrade to Version 4.10 (expected to be available on January 17,

1995) and corresponding modifications to EDGARLink. Release No. 33-

7123. The effective date for the updated Filer Manual also is

January 30, 1995.

\27\Corporation Finance registrants desiring to participate in a

phase-in group other than the one established by the Commission

should direct their requests under Rule 901(a)(2) of Regulation S-T

[17 CFR 232.901(a)(2)] to Sylvia J. Reis or Serena C. Swegle, Mail

Stop 3-8, 450 Fifth Street, N.W., Washington, D.C. 20549 ((202) 942-

2940). Investment Management registrants should submit requests for

a change in phase-in date under Rule 902(d) of Regulation S-T [17

CFR 232.902(d)] to Anthony A. Vertuno or Ruth Armfield Sanders, Mail

Stop 10-6, at the same address ((202) 942-0591).

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III. Amendments to EDGAR Rules

The staff has gained substantial experience with the EDGAR system

and its implementing regulations since the first mandated filings were

made in April 1993, and determined that certain refinements to its

electronic filing rules would be desirable. Proposed amendments were

published for comment in July 1994.\28\ The Commission received seven

comment letters with respect to the proposed changes.\29\ With few

exceptions, to be addressed below in the context of specific rule

changes, the proposed amendments were well received by the commenters.

Consequently, the Commission has determined to adopt the amendments in

nearly all cases as proposed; modifications to accommodate commenters'

concerns will be identified below. Many of the amendments are minor

changes affecting substantive filing requirements (several of which

represent codifications of staff interpretations), or clarifying

language in the current requirements in an effort to enhance filers'

understanding of their electronic filing obligations. Others consist of

matters involving Commission procedures and practices as well as

technical corrections to the rules adopted previously. The specific

amendments are addressed below.

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\28\See Release No. 33-7074.

\29\The comment letters are available for inspection and copying

in the public reference room at the Commission's headquarters. (File

No. S7-20-94).

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A. Changes to Regulation S-T

Regulation S-T, which controls the preparation and submission of

electronic filings to the Commission, is amended as described below.

Rule 12(b) of Regulation S-T. Regulation S-T is amended to

codify that electronic filers are permitted to submit filings on

diskette and magnetic tape to the Commission's Operations Center in

Alexandria, Virginia. Filers who file on diskette and magnetic tape may

prefer to send them directly to the Operations Center to expedite

acceptance processing of their submissions, since diskettes and tapes

sent to the Commission's headquarters must be forwarded to the

Operations Center for processing.

New Rule 13(d) of Regulation S-T. Exchange Act Rule 14a-

6(b) provides that definitive proxy statements may be ``filed with, or

mailed for filing to, the Commission not later than the date such

material is first sent or given to any security holder.''30

Similar provisions are found in other Commission rules.31 Although

electronic filers could mail diskettes or magnetic tapes, those

choosing to file by direct transmission do not currently have this

option. Instead, they must file before or on the date the paper

counterpart is mailed to investors; such filing date must be a business

day of the Commission. Paper filers (or those using diskettes or

magnetic tape) have more flexibility, because not only can they satisfy

their filing obligations by putting copies in the mail to the

Commission at the time of distribution (thus allowing the actual filing

to occur after the distribution), they also can satisfy their filing

obligation by mailing on Saturday or Sunday, an option not available to

direct transmission filers. To place electronic filers on the same

footing with paper filers with respect to these filing requirements,

the Commission proposed that a new provision be added to Regulation S-T

allowing electronic filers to file their definitive proxy materials (or

other documents, as applicable) before or on the date the paper

distribution is made, or if the distribution does not occur on a

business day of the Commission, as soon as practicable on the next

business day. The change has been adopted as proposed.

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\3\017 CFR 240.14a-6(b).

\3\1See 17 CFR 240.14a-6(c) (relating to personal soliciting

materials); 17 CFR 240.14a-11(c) (relating to information delivered

to investors prior to sending a required proxy statement in an

election contest); 17 CFR 240.14a-12(b) (relating to delivery of

soliciting materials prior to sending a required proxy statement in

circumstances other than election contests); 17 CFR 240.14c-5(b)

(relating to definitive information statements); and 17 CFR 240.16b-

3(b)(2)(ii) (relating to employee benefit plan information to be

furnished to investors prior to a vote on changes to the plan).

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Rule 101(a)(1)(i) of Regulation S-T. The Regulation S-T

list of mandated electronic submissions has been revised to

specifically include prospectuses filed under the Securities

Act.32

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\3\2This makes it clear that prospectus filings pursuant to

Securities Act Rules 424 [17 CFR 230.424] and 497 [17 CFR 230.497]

are to be filed electronically. For investment company filings, Rule

101(a)(1)(i) includes statements of additional information and,

where required to be filed with the Commission, prospectuses

submitted under Securities Act Rule 482 [17 CFR 230.482]. See

amendments to paragraphs (a) and (e) of Rule 902 of Regulation S-T,

which codify a limited exception to the electronic filing

requirements for Securities Act Rule 497 filings.

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Rule 101(a)(1)(iii) of Regulation S-T. The Regulation S-T

list of mandated electronic submissions has been revised to

specifically exclude Form 13F33 from the list of mandated

electronic filings, consistent with other rule provisions and codifying

current staff interpretations.34

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\3\317 CFR 249.325.

\3\4See Rule 903(a)(3) of Regulation S-T [17 CFR 232.903(a)(3)].

See also Section V of Release No. IC-19284.

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New Rule 101(b)(3) of Regulation S-T. As proposed, all

employee benefit plans will be permitted to file their entire annual

report on Form 11-K35 in paper or in electronic format.36

Prior to this amendment, Regulation S-T required Forms 11-K to be filed

electronically,37 but registrants were allowed to file any

financial statements and schedules prepared in accordance with the

financial reporting requirements of the Employee Retirement Income

Security Act of 1974 (``ERISA'')38 in paper under cover of Form

SE.39 Four commenters responded to the Commission's solicitation

of views on the treatment of Forms 11-K. All supported relief from

electronic presentation for at least a portion of the financial

information required in these reports. Two indicated that electronic

filing should be completely optional. Another supported optional

electronic filing at least for annual reports filed by ERISA plans. The

final commenter believed that Forms 11-K should continue to be filed

electronically, with the paper submission under cover of Form SE being

restricted. Because of the unique nature and purpose of reports on Form

11-K, together with the staff's experience in implementing the Form 11-

K requirements involving Form SE, the rules are being adopted as

proposed.

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\3\517 CFR 249.311.

\3\6Of course, the same would be true for employee benefit plan

annual reports filed as amendments to Forms 10-K [17 CFR 249.310] or

10-KSB [17 CFR 249.310b], as permitted by Exchange Act Rule 15d-21

[17 CFR 240.15d-21]. This would not be the case for an amendment to

Forms 10-K or 10-KSB filed for any other reason.

\3\7Rule 101(a)(1)(iii) of Regulation S-T [17 CFR

232.101(a)(1)(iii)].

\3\8Pub. L. No 93-406 (codified at 29 U.S.C. 1001 et seq.).

\3\917 CFR 232.311(c) and General Instruction E of Form 11-K.

Form SE is found at 17 CFR 239.64, 249.444, 259.603, 269.8, and

274.403.

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New Rules 101(b)(4) and (5) of Regulation S-T. The

following filings will be explicitly included among those allowed to be

submitted in electronic format, consistent with other rule provisions

and current staff interpretations:

Reports on Form 13F, filed with the Commission by institutional

investment managers as required by Section 13(f)(1)40 of, and Rule

13f-141 under, the Exchange Act, on magnetic tape in the format

described in Form 13F-E;42 and

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\4\015 U.S.C. 78m(f)(1).

\4\117 CFR 240.13f-1.

\4\217 CFR 249.326. See Rule 903(a)(3) of Regulation S-T [17 CFR

232.903(a)(3)].

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Exhibits to Form N-SAR43 except that the Financial Data

Schedule required under Rule 483 under the Securities Act 44 must

be filed in electronic format.45

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\4\317 CFR 274.101.

\4\417 CFR 230.483.

\4\5See Rule 903(a)(1) of Regulation S-T [17 CFR 232.903(a)(1)].

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Rule 101(c) of Regulation S-T. The following filings will

be required to be filed in paper rather than electronically, codifying

current staff interpretations, as proposed:

Form F-6, for registration under the Securities Act of depositary

shares represented by American Depositary Receipts;46

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\4\617 CFR 239.36. Rule 101(c)(18) of Regulation S-T.

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Annual reports filed with the Commission by indenture trustees

pursuant to the Trust Indenture Act;47

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\4\7See Section 313(d) of the Trust Indenture Act [15 U.S.C.

77mmm(d)]. Rule 101(c)(19) of Regulation S-T. Section 313 of the

Trust Indenture Act requires indenture trustees to mail to all

registered holders of indenture securities at stated intervals no

less than 12 months a brief report with respect to any of several

enumerated events set forth in the statute. Indenture trustees are

required to file a copy of such reports with each stock exchange

upon which the indenture securities are listed, and also with the

Commission, at the time the report is mailed to security holders.

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Applications for an exemption from Exchange Act reporting

obligations filed pursuant to Section 12(h) of the Exchange Act;48

and

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\4\815 U.S.C. 78l(h). Rule 101(c)(20) of Regulation S-T.

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Information relating to employee benefit plan transactions required

to be filed pursuant to Rule 16b-3(b)(2)(ii)49 under Section 16 of

the Exchange Act.50

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\4\917 CFR 240.16b-3(b)(2)(ii).

\5\015 U.S.C. 78p. Rule 101(c)(21) of Regulation S-T. Rule 16b-

3(b)(2)(ii) requires an issuer to furnish in writing to the holders

of record of the securities entitled to vote for an employee benefit

plan, and file with the Commission, substantially the same

information concerning the plan that would be required by the rules

and regulations in effect under Section 14(a) of the Exchange Act

[15 U.S.C. 78n(a)] at the time, where votes or consents were not

solicited in a manner substantially in compliance with the

Commission's proxy rules.

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Rule 101(c)(2) of Regulation S-T. The rules governing the

submission of supplemental information are being revised, as proposed,

to specify that such information should be furnished in paper only if

the submitter requests that the information be returned after staff

review and where the information is of the type typically returned by

the staff pursuant to Rule 418(b) of Regulation C or Rule 12b-4 of

Regulation 12B.51 This change does not affect the current

provision requiring that supplemental information submitted in

connection with a confidential treatment request be submitted in paper.

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\5\117 CFR 230.418(b) and 17 CFR 240.12b-4, respectively. These

rules permit the return of supplemental information where the

request for the return of the information is made at the time of

submission and where such return is consistent with the protection

of investors and with the provisions of the Freedom of Information

Act [5 U.S.C. 552].

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Rule 101(c)(3) of Regulation S-T. The provision exempting

shareholder proposal submissions from electronic filing has been

clarified to state that all correspondence relating to shareholder

proposals submitted to the staff pursuant to Exchange Act Rule 14a-8

52 should be filed in paper.

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\5\217 CFR 240.14a-8.

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Rule 101(c)(8) of Regulation S-T. A reference to the

Commission's regional offices has been amended to reflect current

nomenclature.

Rule 101(c)(10) of Regulation S-T. As proposed, the

exclusion from electronic filing afforded to promotional material and

sales literature has been expanded to include all such materials

supplementally furnished to the staff of the Division of Corporation

Finance. The exclusion previously had been limited to materials

submitted pursuant to Securities Act Industry Guide 5.53 The

exclusion also has been expanded to specify the exclusion of sales

literature submitted under Rule 24b-254 of the Investment Company

Act of 1940 (``Investment Company Act''),55 consistent with that

rule.56

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\5\317 CFR 229.801(e).

\5\417 CFR 270.24b-2.

\5\515 U.S.C. 80a-1 et seq.

\5\6See Section III.C of Release No. IC-19284.

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Rule 102(a) of Regulation S-T. Prior to the amendment

adopted today, Rule 102(a) of Regulation S-T stated that ``[e]xhibits

to an electronic filing that have been filed previously in paper may,

but shall not be required to be, restated in electronic format.''

57 That language has been clarified, as proposed, by stating that

exhibits incorporated by reference from filings previously made in

paper (either before becoming subject to mandated electronic filing

requirements or pursuant to a hardship exemption) may be, but are not

required to be, refiled in electronic format.58

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\5\717 CFR 232.102(a).

\5\8See discussion of revised Rule 311(b) of Regulation S-T,

below, for treatment of exhibits to schedules filed pursuant to

Section 13 or 14(d) of the Exchange Act [15 U.S.C. 78(m) or (n)(d),

respectively]. In addition, registered investment companies and

business development companies are directed to the requirements of

Rule 102(e) [17 CFR 232.102(e)].

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Rule 102(e) of Regulation S-T. Rule 102(e) of Regulation

S-T has been amended to clarify the requirement that, after a date

three years after its phase-in date, a registered investment company or

business development company may incorporate by reference only

documents filed electronically. Specifically, the amendments clarify

that the exemption in the rule for documents filed in paper pursuant to

a hardship exemption would be applicable only if any required

confirming copy has been submitted. The rules also now provide that an

exhibit, filed in paper, to Form N-SAR59 may be incorporated by

reference into another Form N-SAR filing.

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\5\917 CFR 274.101.

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Rule 302(b) of Regulation S-T. In order to avoid any filer

misunderstanding of the current requirement to retain a manually signed

signature page or other signature authentication document, the

Commission is clarifying the rule to specifically require a manual

signature with respect to each signatory to the electronic filing.

New Rule 302(c) of Regulation S-T. As proposed, Commission

rules no longer will require manual signatures on the paper copies of

electronic filings required to be furnished by filers to national

securities exchanges and national securities associations.60

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\6\0For example, Exchange Act Rule 12b-11 [17 CFR 240.12b-11]

requires that a manually signed copy of Exchange Act reports be

filed with each exchange upon which the registrant's securities are

registered.

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New Rules 303(a)(3) and (4) of Regulation S-T. The

following are added to the list of documents that may not be

incorporated by reference, consistent with other rule provisions61

and current staff interpretations:

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\6\1See revised Rule 102(e) of Regulation S-T [17 CFR

232.102(e)].

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For a registered investment company or a business development

company making electronic submissions more than three years after its

phase-in date, a document which has not been filed in electronic

format, unless the document has been filed in paper pursuant to a

hardship exemption and any required confirming copy has been submitted

or the document is an exhibit, filed in paper, to Form N-SAR, and is

being incorporated by reference into another Form N-SAR filing.

For investment company filings, any Financial Data Schedule

required under Securities Act Rule 483.62

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\6\217 CFR 230.483.

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Rule 304(a) of Regulation S-T. Under the amended rules,

descriptions of omitted graphic and image material will be allowed to

be placed either in the text of an electronic filing where the omission

occurs or in an appendix thereto, at the option of the filer.

Registrants no longer will be required to list all omitted material in

an appendix to the filing. Descriptions should be provided in narrative

or tabular format, as appropriate.

Rule 304(d) of Regulation S-T. Phased-in registrants

subject to the requirement to furnish a stock performance comparison

graph in their proxy statements pursuant to Item 402(l) of Regulation

S-K63 will be required to satisfy that obligation in their

electronic filing in the same manner as applicable to other types of

omitted charts or graphs, that is, by describing the omitted

performance graph by presenting the graph's data points in tabular

form.64 The requirement to furnish a paper copy of the performance

graph to the Branch Chief in the Division of Corporation Finance

responsible for the review of the registrant's filings is retained, in

order to allow the staff to continue monitoring information as

distributed to investors.65 As proposed, the option to file the

graph in paper under cover of Form SE66 is eliminated to prevent

the possibility of an incomplete electronic presentation to the reader

without reference to the Form SE.

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\6\317 CFR 229.402l.

\6\4See letter from Mauri L. Osheroff, Associate Director,

Regulatory Policy, Division of Corporation Finance, dated November

16, 1993, for an example of how the performance graph may be

presented in tabular form in the proxy statement. This letter is

available through the EDGAR Bulletin Board.

\6\5The previous requirement was found in Rule 304(d)(2) of

Regulation S-T [17 CFR 232.304(d)(2)]. It now is incorporated into

paragraph (d) of that section.

\6\6Rule 304(d)(1) of Regulation S-T [17 CFR 232.304(d)(1)].

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New Rule 311(b) of Regulation S-T. The rule governing

filing of exhibits in paper under cover of Form SE has been amended as

proposed to provide that exhibits to a Commission schedule filed

pursuant to Section 13 or 14(d) of the Exchange Act may be filed in

paper under cover of Form SE where such exhibits previously were filed

in paper (either before becoming subject to mandated electronic filing

or pursuant to a hardship exemption) and are required to be refiled

pursuant to the schedule's general instructions. In the past, such

documents were required to be filed in electronic format along with the

schedule to which they relate, absent a hardship exemption.67

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\6\7For example, where an issuer delivers its Form 10-K with its

Schedule 13E-4 [17 CFR 240.13e-101] in connection with its issuer

tender offer proposal, the Form 10-K must be filed as an exhibit to

the schedule, notwithstanding the fact that it previously had been

filed with the Commission. See Item 9 of Schedule 13E-4. Under prior

rules, the Form 10-K was required to be filed electronically as an

exhibit, even if it originally had been filed in paper. Under the

rules adopted today, the exhibit will continue to be required, but

it may be filed in paper under cover of Form SE if it originally had

been filed in paper.

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New Rule 311(c) of Regulation S-T. Under the amended

rules, insurance companies that file information included in their

annual statements provided to state insurance regulators (i.e.,

Schedules O and P)68 as exhibits to their Forms 10-K will be

allowed to file such documents in paper under cover of Form SE because

of difficulties in translating them into a format compatible with

EDGAR.69

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\6\8See Item 601(b)(28) of Regulations S-K and S-B [17 CFR

229.601(b)(28) and 228.601(b)(28), respectively].

\6\9Since April 1993, the staff, via delegated authority, has

granted requests for continuing hardship exemptions (Rule 202 of

Regulation S-T [17 CFR 232.202]) for this type of document for a

period of one year. Hardship exemptions no longer need be obtained

with respect to these documents.

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Rule 311(d) of Regulation S-T. The revisions also codify

the staff's interpretation that a Financial Data Schedule is not among

those exhibits to Form N-SAR that an investment company may submit in

paper under cover of Form SE.

Rules 901(a) and 902(a) of Regulation S-T. As proposed, a

note has been added to Rules 901 and 902 of Regulation S-T to make it

clear that registrants become subject to mandated electronic filing

upon their phase-in date and all subsequent filings must be made

electronically, even filings made with respect to transactions that

commenced prior to, and are in process, at the time a registrant is

phased in.70 The note to Rule 902(a) also clarifies the limited

exception for definitive filings by investment companies under

Securities Act Rule 497.

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\7\0Of course, under Rule 101(a)(1)(iii) of Regulation S-T, a

registrant may file its Form 10-K or Form 10-KSB in paper if it

is the first document filed with the Commission on or following its

phase-in date.

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Rule 901(c)(4) of Regulation S-T. A note has been added to

Rule 901 of Regulation S-T explaining that while entities subject to

mandated electronic filing generally may choose to electronically file

Schedules 13D71 and 13G72 with respect to a paper filer,

domestic electronic filers are restricted from doing so with respect to

foreign private issuers because EDGAR currently requires an Internal

Revenue Service tax identification number to be inserted for the

subject company as a prerequisite to acceptance of the filing. It is

anticipated that the EDGAR system will be modified in the future to

process such filings, but until that time, they should be filed in

paper.73

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\7\117 CFR 240.13d-101.

\7\217 CFR 240.13d-102.

\7\3Questions relating to electronic filing of Schedules 13D or

13G with respect to foreign private issuers should be directed to

Sylvia J. Reis, Assistant Director, CF-EDGAR Policy, Division of

Corporation Finance, at (202) 942-2940.

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Rules 901(d) and 902(g) of Regulation S-T. Since mandated

electronic filing began in April 1993, filers have been required to

furnish to the Commission a paper copy of each electronic filing made

during the first year following phase-in. This rule was adopted to

implement Section 35A(d)(3) of the Exchange Act.74 Since its

proposal in 1992, filers have characterized the requirement as

burdensome. In response, the Commission proposed reducing the paper

submission requirement so that filers could satisfy their paper copy

obligations by furnishing a paper copy of their first electronic filing

only. Four commenters addressed the issue. Three supported the

reduction, characterizing the paper submission requirement as

``wasteful'' and ``unnecessary.'' One commenter argued that the format

of electronic filings is not as desirable to read as copies of paper

documents, implying that electronic filings are not suitable

alternatives to paper filings. While it is true that electronic filings

often are not as aesthetically pleasing as typeset paper versions, the

content of the filing, not its typeface, is what is of interest to

investors. Furthermore, this argument carries little weight against

reducing the paper copy requirement, since filers may satisfy such

requirement by furnishing a paper printout of the electronic filing.

---------------------------------------------------------------------------

\7\415 U.S.C. 78ll(d)(3).

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In light of the comments to the proposal, and in connection with

the six-month evaluation of the EDGAR system, the Commission has

reviewed the paper copy requirement and procedures. As stated in the

report, the EDGAR system is reliable, provides a suitable alternative

to written and printed filings, and provides information as effectively

and efficiently for filers, users and disseminators as the written or

printed counterpart.75 Consequently, the requirement has been

modified, as proposed, to require new electronic filers to furnish to

the Commission one paper copy of their first electronic filing

only.76 Pursuant to a commenter's suggestion, the paper copy rule

also is being clarified to state that persons making third party

filings, such as proxy materials or beneficial ownership reports, with

respect to an electronic registrant also are required to submit a paper

copy with their first electronic filing only.

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\7\5See Exchange Act Section 35A(d)(3)(B) [15 U.S.C.

78ll(d)(3)(B)], which permits a reduction of the paper copy

requirement if these elements are established.

\7\6The requirement to place a legend on the top of the paper

copy has been modified and retained; the rules also have been

modified to require the copy to be sent to the Commission's

Operations Center in Alexandria, Virginia, as is currently the

practice. All filers that have submitted a paper copy of at least

one electronic filing before the effective date of this amendment

may cease furnishing paper copies of electronic filings made on or

after the effective date.

The Commission solicited comment about whether the six business

day period for submission of the paper copy should be shortened or

lengthened. Commenters did not feel strongly about this issue;

consequently, no time period changes have been adopted.

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Rule 902(e) of Regulation S-T. The amendments clarify the

limited exception contained in Rule 902(e) of Regulation S-T77 for

definitive filings by investment companies under Rule 497 of the

Securities Act, to mandated electronic filing.

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\7\717 CFR 232.902(e).

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B. Changes to Item 601 of Regulations S-K and S-B

Item 601 of Regulations S-K and S-B, which govern the filing of

exhibits, including the new Financial Data Schedule, are amended as

described below.

The exhibit tables of Regulations S-K and S-B have been

amended as proposed to indicate that charter documents are to be filed

with quarterly reports on Forms 10-Q78 and 10-QSB79 pursuant

to paragraph (b)(3) of Regulations S-K80 and S-B81 if such

documents had been amended during the reporting period, thereby

reflecting the requirements of Item 601(a)(4) of Regulations S-B and S-

K.82

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\7\817 CFR 249.308a.

\7\917 CFR 249.308b.

\8\017 CFR 229.601(b)(3).

\8\117 CFR 228.601(b)(3).

\8\217 CFR 228.601(a)(4) and 17 CFR 229.601(a)(4), respectively.

Revised exhibit table of Item 601 of Regulations S-K and S-B.

---------------------------------------------------------------------------

Item 601 of Regulations S-K and S-B has been amended to

state that if an instrument defining the rights of security holders is

in the form of a certificate, the text appearing on the certificate

must be reproduced in an electronic filing, together with a description

of any other graphic and image material appearing on the

certificate.83

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\8\3Instruction to Item 601(b)(4) of Regulations S-K and S-B [17

CFR 229.601(b)(4) and 17 CFR 228.601(b)(4), respectively].

---------------------------------------------------------------------------

Item 601(b)(10) of Regulations S-K and S-B has been

amended to clarify that a material contract that becomes effective or

that is executed during the reporting period reflected by an annual or

quarterly report must be filed as an exhibit to the periodic report

filed for the corresponding period.84 The amended rules also make

it clear that only new material contracts must be filed with quarterly

reports; Forms 10-Q and 10-QSB, unlike Forms 10-K and 10-KSB, do not

require a list of all material contracts.

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\8\4Instruction 2 to Item 601(b)(10) to Regulations S-K and S-B

[17 CFR 229.601(b)(10) and 17 CFR 228.601(b)(10), respectively].

---------------------------------------------------------------------------

Applications filed for the purpose of determining the

eligibility of a person designated as trustee for debt securities

registered under the Securities Act that are eligible to be issued,

offered, or sold on a delayed basis by or on behalf of the registrant,

pursuant to Section 305(b)(2) of the Trust Indenture Act,85 will

now be required to be filed separately in the manner prescribed by the

EDGAR Filer Manual.86 Prior to this amendment, such filings were

required to be filed as an exhibit to a post-effective amendment to the

registration statement to which the application relates. This change is

intended to provide expedited processing of such filings. Of course,

the general procedure requiring all other trust indenture eligibility

applications on Form T-1 and T-287 to be submitted as an exhibit

to the registration statement remains intact.88

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\8\515 U.S.C. 77eee(b)(2).

\8\6Revision of Item 601(b)(25)(ii) of Regulations S-K and S-B

[17 CFR 229.601(b)(25)(ii) and 17 CFR 228.601(b)(25)(ii),

respectively]. A new electronic form type 305B2 has been added to

EDGAR programming to accommodate this type of filing. This new form

type is provided in EDGAR release 4.0 and appears in the EDGAR Filer

Manual, dated September 1994, which became effective October 31,

1994.

\8\717 CFR 269.1 and 17 CFR 269.2, respectively.

\8\8See Item 601(b)(25)(ii) of Regulations S-K and S-B [17 CFR

229.601(b)(25)(ii) and 228.601(b)(25)(ii), respectively].

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Item 601 also has been amended to clarify that earnings

statements ``made generally available'' pursuant to Sec. 11(a) of the

Securities Act89 should be filed as an exhibit to Exchange Act

periodic reports only where the statement was made available using

methods other than including the information in another filing with the

Commission, as provided by Securities Act Rule 158.90

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\8\915 U.S.C. 77k(a).

\9\017 CFR 230.158. Revised Item 601(b)(99)(iii) of Regulation

S-K [17 CFR 229.601(b)(99)(iii)] and Item 601(b)(99)(ii) of

Regulation S-B [17 CFR 228.601(b)(99)(ii)].

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As proposed, Financial Data Schedules will not be required

to be filed in connection with registration statements on Form S-

891 (for registration of securities issued pursuant to employee

benefit plans), since updated financial information is rarely included

in such filings.92

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\9\117 CFR 239.16b.

\9\2Revision of note to Item 601(c)(1) of Regulations S-K and S-

B. This is a revision to the note adopted in connection with the

implementation of Financial Data Schedules, which indicates that no

Financial Data Schedule is required for Form 11-K. See Release No.

33-7072.

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A note has been added to Item 601(c) of Regulations S-K

and S-B, providing that the paper copy of an electronic filing sent to

the Commission's Operations Center in Alexandria, Virginia pursuant to

Rule 901(d) of Regulation S-T need not contain any Financial Data

Schedule included in that filing. Similarly, registrants will not be

required to furnish paper versions of their Financial Data Schedules

with the paper copies sent to national securities exchanges and

national securities associations pursuant to Commission rules.93

Both provisions are consistent with the Commission's position, also

codified in the note, that paper copies of the Schedule are not

required with filings made in paper pursuant to a hardship exemption

because the Schedule merely reflects information found elsewhere in the

filing, and thus, it is only useful in electronic filings.94

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\9\3Note 2 to paragraph (c)(1) of Item 601 of Regulations S-K

and S-B.

\9\4When a paper filing made pursuant to a hardship exemption is

followed up by a confirming electronic copy, the Financial Data

Schedule should be included in the confirming copy. See n. 287 in

Release No. 33-6977.

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C. Changes to Securities Act Rule 483 and Form S-6

The following amendments to rules and forms under the Securities

Act and Investment Company Act in connection with Financial Data

Schedule requirements have been adopted as proposed:

A note has been added to Securities Act Rule 483(e)

indicating that paper copies of Financial Data Schedules are not

required to be furnished to the Commission or to national securities

exchanges or national securities associations.95

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\9\5Note 2 to paragraph (e)(1) of Securities Act Rule 483. See

Note 2 to Item 601(c) of Regulations S-K and S-B, discussed above.

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Form S-6\96\ has been amended to make it clear that a

Financial Data Schedule is required only upon the filing of an

amendment to a registration statement on that form.

---------------------------------------------------------------------------

\96\17 CFR 239.16.

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D. Changes to Public Utility Act Rules and Forms

The following amendments to the Public Utility Act Rules and Forms

have been adopted as proposed:

Forms U5B,\97\ U5S,98 and U-1\99\ under the Public

Utility Act have been amended to state that if an instrument defining

the rights of security holders is in the form of a certificate, the

text appearing on the certificate must be reproduced in an electronic

filing.\100\

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\97\17 CFR 259.5b.

\98\17 CFR 259.5s.

\99\17 CFR 259.101.

\100\Instructions for Exhibits B to Forms U5B and U5S and

Instruction A to Instructions as to Exhibits to Form U-1. These

changes parallel those made to Item 601(b)(4) of Regulations S-K and

S-B, discussed above.

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E. Other Changes

Other amendments are listed below.

As proposed, Exchange Act Rule 12b-15\101\ has been

amended to specify the number of copies required to be filed in

connection with amendments to Exchange Act filings made in paper.

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\101\17 CFR 240.12b-15.

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An electronic filing provision of Regulation 13D relating

to electronic amendments to Schedules 13D and 13G has been amended to

track its parallel provision in Regulation S-T.\102\

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\102\Exchange Act Rule 13d-2(c) [17 CFR 240.13d-2(c)].

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A note to Exchange Act Rule 14a-4103 codifies the

Commission's position that proxy cards should be filed as appendices at

the end of proxy statements filed in electronic format, and not as

separate documents within the electronic submission.\104\ In a similar

vein, Instruction 3 to Item 10 of Schedule 14A\105\ now instructs

electronic registrants to file employee benefit plan documents required

to accompany the proxy statement as appendices to the proxy statement.

As in the past, filers are not required to deliver the plan documents

to shareholders unless they are a part of the proxy statement.

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\103\17 CFR 240.14a-4.

\104\See Section IV.F.5 of Release No. 33-6977.

\105\17 CFR 240.14a-101.

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Item 22(a)(4) of Schedule 14A has been amended to clarify

that the Financial Data Schedule, required to be submitted by

investment companies with certain proxy materials, would be submitted

as an exhibit to the proxy statement.

Technical revisions have been made to the cover pages of

proxy and information statements to make them easier to understand and

expedite processing.\106\ The rules have been revised to clarify that

the cover page is for the use of the Commission and is not required to

be distributed to security holders.\107\ Further, a change has been

made to Schedule 14A to ensure that the approximate date on which the

proxy statement and form of proxy are first sent or given to security

holders must be printed on the first page of the proxy statement sent

to investors, and not on the cover sheet.\108\

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\106\For example, a box has been added for filers of definitive

material to check if the fee had previously been paid with

preliminary materials and a reference to Item 22(a)(2) of Schedule

14A has been added to the ``Payment of Filing Fee'' section.

\107\Revised Rule 14a-6(m) [17 CFR 240.14a-6(m)] and Rule 14c-

5(h) [17 CFR 240.14c-5(h)].

\108\Amended paragraph (b) of Item 1 of Schedule 14A.

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The tender offer rules have been amended as proposed to

make it clear that tender offer periods are tolled because of failure

to file required documents in electronic format only when the bidder is

required to file electronically or, if applicable, after it has elected

to do so by filing the Tender Offer Statement in electronic form.\109\

While this has always been the intended reading of the EDGAR provisions

of the tender offer rules, questions have been raised as to whether the

time periods would be tolled under other circumstances.

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\109\Exchange Act Rule 14e-1(e) [17 CFR 240.14e-1(e)]. For

example, if the bidder is an electronic filer and the target company

is also an electronic company, and the bidder files its Tender Offer

Statement in paper in violation of the electronic filing rules, the

time periods will be tolled with respect to the tender offer until a

confirming electronic copy of the Statement is submitted. Where the

bidder is an electronic filer and the target is a paper filer, if

the bidder elects to file in paper under Rule 901(c)(1) of

Regulation S-T [17 CFR 232.901(c)(1)], it may do so without tolling

the tender offer periods, because paper filing is specifically

permitted by that provision. However, if the electronic bidder

elects to electronically file its Tender Offer Statement with

respect to a paper company, as permitted by Regulation S-T, any

subsequent filing in paper by the bidder with respect to the

transaction will cause the tender offer periods to be tolled until

confirming electronic copies of these documents are submitted.

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The number of paper copies of Form SE (for use with

documents filed in paper pursuant to a hardship exemption or other

specified purposes) and Form TH\110\ (used in connection with paper

filings pursuant to a temporary hardship exemption) required to be

filed has been increased from three to four, to facilitate processing

by the staff.

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\1\1017 CFR 239.65, 249.447, 259.604, 269.10, and 274.404.

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III. Common Mistakes Made by EDGAR Filers

Since the adoption of the interim rules in February 1993, the

Commission staff has been working with electronic filers to help them

satisfy their electronic filing obligations. The Commission has issued

the following list of staff suggestions to help electronic filers avoid

some of the more common errors associated with electronic filing.\111\

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\111\See Section III of Release No. 33-7074 for a more

comprehensive discussion of these issues.

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Filers should review documents in electronic format and

error check using EDGARLink prior to transmitting documents for filing.

For example, filers should check to make sure they are filing on the

correct form type and are using accurate CIK and CCC numbers.

Care must be taken to use and

tags correctly; submissions with these tags are not official Commission

filings.

Filing fees in connection with good-money filings must be

paid to the lockbox before or at the time the filing is made. Filers

should allow time for wire transfers prior to filing.

Filers should be prepared to file early to avoid last-

minute filing problems, especially in connection with time-sensitive

filings.

Filers have an obligation to confirm the status of their

filings after transmitting them to the Commission. Filing date

adjustments\112\ will be made, as warranted, for Exchange Act reports,

but generally will not be granted to backdate a filing over an extended

period of time. It is not staff policy to grant filing date adjustments

for Securities Act registration statements or other transactional

filings, since shareholder rights may be affected.

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\112\Rule 13(b) of Regulation S-T [17 CFR 232.13(b)].

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IV. Cost-Benefit Analysis

The costs and benefits associated with mandated electronic filing

generally were addressed in earlier releases associated with the

adoption of the EDGAR interim rules, which today are being made final.

In summary, the Commission stated that while some costs attend the

implementation of an electronic filing system, for the Commission,

filers and users, the benefits far outweigh the costs. Filers avoid

uncertainty and delays that may occur with courier delivery or other

modes of transportation used in connection with paper filings. Filing

hours are extended for electronic submissions and acceptance processing

is immediate, giving filers greater flexibility and control over when

filings are made. Filers may avoid multiple submission of the same

information by transmitting once a modular submission for inclusion in

multiple documents. Filers will enjoy further facilitation in

satisfying their filing obligations once one-stop filing with self-

regulatory organizations (``SROs'') and the states is fully

implemented.\113\ Users and disseminators benefit even more from the

EDGAR system's capabilities to identify, sort and broadcast time-

sensitive information to the nation and the world in a matter of

minutes. Investors and financial markets benefit from the immediate

access to information the system provides.

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\113\Frequently, documents filed with the Commission are used to

satisfy SRO and state blue sky law requirements with respect to

securities offerings. The Commission has been working with the SROs,

including the securities exchanges and the National Association of

Securities Dealers, and the states through the North American

Securities Administrators Association (``NASAA'') to develop a

system in which EDGAR filings could be used to satisfy the

requirements of the various parties. Although one-stop filing is not

currently available, it is contemplated that EDGAR will provide the

states, via NASAA, and various SROs with the state and SRO required

public filings that are designated for such treatment by an

electronic filer. Under the contemplated system, the SROs and the

states would furnish the connection with EDGAR and maintain

facilities to receive filings directed to them. The states and SROs

would be able to obtain other public filings through access to the

public EDGAR database.

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One commenter, responding to the Commission's general request for

comments on the EDGAR system, asserts that the Commission never

considered the potential burdens imposed on small businesses by the

EDGAR system, as currently designed. To the contrary, in the release

adopting the interim rules it was noted specifically that the EDGAR

rule proposals elicited comment relating to the costs of: purchasing

electronic equipment; hiring financial printers to file Forms 10-K

because of their complexity; training employees to prepare and file

electronic documents in an unfamiliar format; and preparation and

review of paper documents in addition to electronic versions of those

documents. The Commission recognized that registrants (including all

those defined as small entities) and others who are required to file on

the EDGAR system would incur additional compliance costs. It was

anticipated, however, that those filing electronically also would enjoy

the benefits related to electronic filing, as set forth above.

In the Final Regulatory Flexibility Analysis, the impact electronic

filing would have on small entities was explicitly considered and

several alternative approaches were addressed. It was determined to be

in the public interest to have a complete database available through

the system. Furthermore, small entities themselves would benefit from

the broad and immediate dissemination of their disclosure documents

into the marketplace. Finally, a delayed implementation schedule for

the smallest companies was adopted to allow more than ample time for

these entities to acquire the necessary equipment (most of which is

basic to today's modern workplace, absent EDGAR) and training as modest

resources permit. The views expressed in the foregoing documents have

been supported by the experience gained in the nearly 20 months since

mandated electronic filing began.

No commenter addressed the costs and benefits of the amendments to

the general EDGAR rules that were proposed in July 1994. Given the

technical and minor nature of the amendments, they are not expected to

affect significantly the costs and burdens associated with filing

requirements generally, or specifically with respect to electronic

filing.

V. Final Regulatory Flexibility Analysis

A final regulatory flexibility analysis has been prepared regarding

the amendments in accordance with 5 U.S.C. 603. A copy of the analysis

may be obtained by contacting James R. Budge, Office of Disclosure

Policy, Division of Corporation Finance, U.S. Securities and Exchange

Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. A summary

of the corresponding initial regulatory flexibility analysis appears at

59 FR 36270 [Release No. 33-7074].

VI. Statutory Basis

The foregoing amendments are promulgated pursuant to Sections 6, 7,

8, 10 and 19(a) of the Securities Act, Sections 3, 12, 13, 14, 15(d),

23(a) and 35A of the Exchange Act, Sections 3, 5, 6, 7, 10, 12, 13, 14,

17 and 20 of the Public Utility Act, Section 319 of the Trust Indenture

Act, and Sections 8, 30, 31 and 38 of the Investment Company Act.

List of Subjects in 17 CFR Parts 228, 229, 230, 232, 239, 240, 249,

250, 259, 260, 269 and 274

Accountants, Confidential business information, Investment

companies, Reporting and recordkeeping requirements, Securities,

Utilities.

Text of the Amendments

In accordance with the foregoing, Title 17, Chapter II of the Code

of Federal Regulations is amended as follows:

PART 228--INTEGRATED DISCLOSURE SYSTEM FOR SMALL BUSINESS ISSUERS

1. The authority citation for Part 228 continues to read as

follows:

Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s,

77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77jjj, 77nnn, 77sss,

78l, 78m, 78n, 78o, 78w, 78ll, 80a-8, 80a-29, 80a-30, 80a-37, 80b-

11, unless otherwise noted.

2. By amending Sec. 228.601 in the exhibit table, by adding an

``x'' corresponding to exhibits (3)(i) and (ii) under the caption ``10-

QSB'' and removing the ``x'' corresponding to exhibit (27) under the

caption ``S-8,'' by adding an instruction to paragraph (b)(4)(iii),

redesignating the Instruction to Item 601(b)(10) as Instruction 1 to

Item 601(b)(10) and adding Instruction 2 to Item 601(b)(10), revising

the second sentence of paragraph (b)(25)(ii), revising paragraph

(b)(28)(iv), revising paragraph (b)(99)(ii), revising the note to

paragraph (c)(1)(ii), redesignating the note following paragraph

(c)(1)(vi) as Note 1 to paragraph (c)(1)(vi) and adding Note 2 to

paragraph (c)(1)(vi), to read as follows:

Sec. 228.601 (Item 601) Exhibits.

* * * * *

(b) * * *

(4) Instruments defining the rights of security holders, including

indentures.

* * * * *

(iii) * * *

Instruction to Item 601(b)(4)(iii) for electronic filings. If

the instrument defining the rights of security holders is in the

form of a certificate, the text appearing on the certificate shall

be reproduced in an electronic filing together with a description of

any other graphic and image material appearing on the certificate,

as provided in Rule 304 of Regulation S-T (Sec. 232.304 of this

chapter).

* * * * *

(10) Material Contracts. * * *

Instruction 2 to Item 601(b)(10). If a material contract is

executed or becomes effective during the reporting period reflected

by a Form 10-QSB or Form 10-KSB, it shall be filed as an exhibit to

the Form 10-QSB or Form 10-KSB filed for the corresponding period.

See paragraph (a)(3) of this Item. With respect to quarterly reports

on Form 10-QSB, only those contracts executed or becoming effective

during the most recent period reflected in the report shall be

filed.

* * * * *

(25) Statement of eligibility of trustee. * * *

(ii) * * * Rather, such statements must be submitted as exhibits in

the same electronic submission as the registration statement to which

they relate, or in an amendment thereto, except that electronic filers

that rely on Trust Indenture Act Section 305(b)(2) for determining the

eligibility of the trustee under indentures for securities to be

issued, offered or sold on a delayed basis by or on behalf of the

registrant shall file such statements separately in the manner

prescribed by Sec. 260.5b-1 through Sec. 260.5b-3 of this chapter and

by the EDGAR Filer Manual.

* * * * *

(28) Information from reports furnished to state insurance

regulatory authorities. * * *

(iv) If ending reserves in paragraphs (b)(28)(ii)(A) and

(b)(28)(ii)(B) of this Item or the proportionate share of the small

business issuer and its other subsidiaries in paragraph (b)(28)(ii)(C)

of this Item are less than 5% of the total ending reserves in

paragraphs (b)(28)(ii)(A) and (b)(28)(ii)(B) of this Item, and the

proportionate share of (b)(28)(ii)(C) of this Item, small business

issuers may omit that category and note that fact. If the amount of the

reserves attributable to fifty percent-or-less-owned equity investees

that file this information as companies in their own right exceeds 95%

of the total in paragraph (b)(28)(ii)(C) of this Item, small business

issuers do not need to provide reserves information for the other fifty

percent-or-less-owned equity investees.

* * * * *

(99) Additional Exhibits.

* * * * *

(ii) If pursuant to Section 11(a) of the Securities Act (15 U.S.C.

77k(a)) an issuer makes generally available to its security holders an

earnings statement covering a period of at least 12 months beginning

after the effective date of the registration statement, and if such

earnings statement is made available by ``other methods'' than those

specified in paragraphs (a) or (b) of Sec. 230.158 of this chapter, it

must be filed as an exhibit to the Form 10-QSB or the Form 10-KSB, as

appropriate, covering the period in which the earnings statement was

released.

(ii) * * *

Note to paragraph (c)(1)(ii): Financial Data Schedules are not

required in connection with registration statements on Form S-8

(Sec. 239.16b of this chapter) or annual reports on Form 11-K

(Sec. 249.311 of this chapter), for employee stock purchase, savings

and similar plans.

* * * * *

(vi) * * *

Note 2 to paragraph (c)(1)(vi): Paper copies of the Financial

Data Schedule are not required to be furnished with the paper copy

sent to the Commission's Operations Center in Alexandria, Virginia

pursuant to Rule 901(d) of Regulation S-T (Sec. 232.901(d) of this

chapter), or with the paper copies of filings required by the

Commission rules to be furnished to the national securities exchange

or national securities association upon which the registrant's

securities are listed. Similarly, no paper copy of a Financial Data

Schedule is required with filings made in paper pursuant to a

hardship exemption; however, any required electronic confirming copy

of such filing should be accompanied by a Financial Data Schedule,

where appropriate pursuant to paragraph (c)(1)(ii) of this section.

* * * * *

PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER THE

SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY

POLICY AND CONSERVATION ACT OF 1975--REGULATION S-K

3. The authority citation for Part 229 continues to read in part as

follows:

Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s,

77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj, 77nnn,

77sss, 78c, 78i, 78j, 78l, 78m, 78n, 78o, 78w, 78ll(d), 79e, 79n,

79t, 80a-8, 80a-29, 80a-30, 80a-37, 80b-11, unless otherwise noted.

* * * * *

4. By amending Sec. 229.601 in the exhibit table, by adding an

``x'' corresponding to exhibits (3)(i) and (ii) under the caption ``10-

Q'' and removing the ``x'' corresponding to exhibit (27) under the

caption ``S-8'', by designating the current instruction at the end of

paragraph (b)(4) as Instruction 1 to paragraph (b)(4) and adding

Instruction 2 to paragraph (b)(4), designating the current instruction

at the end of paragraph (b)(10) as Instruction 1 to paragraph (b)(10)

and adding Instruction 2 to paragraph (b)(10), revising the second

sentence of paragraph (b)(25)(ii), by revising paragraph (b)(99)(iii),

revising the note to paragraph (c)(1)(ii), redesignating the note

following paragraph (c)(1)(vi) as Note 1 to paragraph (c)(1)(vi) and

adding Note 2 to paragraph (c)(1)(vi) thereafter, adding a ``)'' before

the period at the end of paragraph (c)(3)(ii), to read as follows:

Sec. 229.601 (Item 601) Exhibits.

* * * * *

(b) * * *

(4) Instruments defining the rights of security holders, including

indentures. * * *

Instruction 2 to paragraph (b)(4) (for electronic filings). If

the instrument defining the rights of security holders is in the

form of a certificate, the text appearing on the certificate shall

be reproduced in an electronic filing together with a description of

any other graphic and image material appearing on the certificate,

as provided in Rule 304 of Regulation S-T (Sec. 232.304 of this

chapter).

* * * * *

(10) Material Contracts. * * *

Instruction 2 to paragraph (b)(10). If a material contract is

executed or becomes effective during the reporting period reflected

by a Form 10-Q or Form 10-K, it shall be filed as an exhibit to the

Form 10-Q or Form 10-K filed for the corresponding period. See

paragraph (a)(4) of this Item. With respect to quarterly reports on

Form 10-Q, only those contracts executed or becoming effective

during the most recent period reflected in the report shall be

filed.

* * * * *

(25) Statement of eligibility of trustee. * * *

(ii) Electronic filings. * * * Rather, such statements must be

submitted as exhibits in the same electronic submission as the

registration statement to which they relate, or in an amendment

thereto, except that electronic filers that rely on Trust Indenture Act

Section 305(b)(2) for determining the eligibility of the trustee under

indentures for securities to be issued, offered or sold on a delayed

basis by or on behalf of the registrant shall file such statements

separately in the manner prescribed by Sec. 260.5b-1 through

Sec. 260.5b-3 of this chapter and by the EDGAR Filer Manual.

* * * * *

(99) Additional Exhibits. * * *

(iii) If pursuant to Section 11(a) of the Securities Act (15 U.S.C.

77k(a)) an issuer makes generally available to its security holders an

earnings statement covering a period of at least 12 months beginning

after the effective date of the registration statement, and if such

earnings statement is made available by ``other methods'' than those

specified in paragraphs (a) or (b) of Sec. 230.158 of this chapter, it

must be filed as an exhibit to the Form 10-Q or the Form 10-K, as