On July 16, the SEC announced a proposed rule, published on July 21 in the Federal Register, titled “Regulation E-Delivery,” seeking to expand the ability of issuers, broker-dealers, investment advisers, and other market intermediaries to use electronic delivery to satisfy information delivery requirements under federal securities laws. Currently, required regulatory information typically must be delivered in paper format, unless the recipient affirmatively elects otherwise. The proposed rule would establish requirements and conditions under which covered entities could deliver required information electronically without first obtaining a recipient’s affirmative consent. The rule would generally supersede the SEC’s decades-old, guidance-based approach to electronic delivery and would apply to a broad range of information, including fund prospectuses, fund annual and semi-annual shareholder reports, proxy statements, trade confirmations, Form CRS disclosures, and Form ADV Part 2 brochures.

Under the proposed rule, a covered entity could rely on electronic delivery to satisfy its obligations where the recipient has provided an electronic address, the entity has given the recipient a prominent disclosure that it will send information to that address, and the recipient has not opted out of electronic delivery. The rule would provide two permissible methods of electronic delivery, requiring direct delivery to the recipient’s electronic address for information that does not include personal financial information, and delivery of a statement of availability, such as an email containing a link, for information that includes personal financial information.

The proposal also includes a transition process for recipients currently receiving information in paper format, under which those recipients would receive a paper notice at least 180 days before the transition to electronic delivery and a follow-up paper notice 30 days before the transition, each describing the upcoming change and the recipient’s ability to opt out. The proposal would also exempt covered information from the consumer consent requirements of the Electronic Signatures in Global and National Commerce Act to the extent those requirements would otherwise apply, and would rescind a rule under the Investment Company Act of 1940 that provides alternative means for registered investment companies to satisfy shareholder report transmission requirements. Comments are due by September 21.