13 June 2018
On November 6, 2017, the SEC's Division of Corporation Finance issued a Compliance and Disclosure Interpretation (C&DI) on Securities Act Rule 701. Rule 701 provides an exemption for certain issuances to employees and, among other things, requires issuers to deliver to employees certain information. The C&DI provides that companies may use standard electronic safeguards (including user-specific logins) in order to protect confidentiality of materials that have been delivered electronically to satisfy Rule 701(e), but the safeguards should not be so burdensome as to deny proper access to the intended recipients. The SEC gave the example of the utilization of a physical disclosure room, which it would expect would be accessible during ordinary business hours upon reasonable notice. Once access to the required information has been granted, however, the SEC provided that the medium used to communicate the required disclosure should provide the opportunity to retain the information or have ongoing access substantially equivalent to personal retention. For more information, see https://www.sec.gov/divisions/corpfin/guidance/securitiesactrules-interps.htm#271.25.