Rule 405 of Regulation S-T: Temporary Hardship Exemption

Regulation S-T governs the submission of electronic filings to the Securities and Exchange Commission (SEC) through its Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. This regulation mandates that most documents be filed electronically to ensure fair and efficient dissemination of information to the public. The rules provide a temporary safe harbor for companies that encounter unexpected technical problems preventing them from submitting a required electronic filing on time.

The exemption acknowledges that technology can fail and provides a structured process for filers to meet their obligations without immediate penalty, provided they follow a precise set of procedures.

Qualifying for a Temporary Hardship Exemption

To use the temporary hardship exemption, a filer must experience “unanticipated technical difficulties” that prevent the timely preparation and submission of an electronic filing. Examples of qualifying situations include a sudden and prolonged power outage affecting the filer’s office, a significant malfunction of the filer’s computer systems, or a documented failure of the filer’s internet service provider.

The exemption is not a remedy for poor planning or preventable errors. Forgetting an EDGAR password, underestimating the time needed to prepare the filing, or dealing with last-minute internal delays are not considered unanticipated technical difficulties. The focus is on external or catastrophic internal events that make a timely electronic submission impossible despite the filer’s diligent efforts.

This temporary relief should be distinguished from a continuing hardship exemption, which is governed by Rule 202 of Regulation S-T. A continuing hardship exemption is for filers who assert that electronic filing is consistently an undue burden or expense. Unlike the temporary exemption, a continuing hardship exemption requires a formal application submitted to the SEC at least ten business days before the filing deadline and is granted infrequently. The temporary exemption is self-executing, meaning the filer can claim it without prior approval.

Required Documentation and Information

The primary document is Form TH, “Notification of Reliance on Temporary Hardship Exemption,” which must be completed and submitted alongside the paper version of the filing. Information required on Form TH includes the filer’s name and Central Index Key (CIK) number, the type of document being filed, the applicable filing period, and a description of the technical difficulties. The filer must provide a brief but clear explanation of the problem that prevented the electronic submission.

In addition to Form TH, the filer must prepare a complete paper copy of the document that was intended for electronic submission. A specific legend must be placed prominently on the cover page of this paper document, as mandated by the SEC. The required text is: “IN ACCORDANCE WITH RULE 201 OF REGULATION S-T, THIS (specify document) IS BEING FILED IN PAPER PURSUANT TO A TEMPORARY HARDSHIP EXEMPTION.”

The paper document must be properly signed. The signatures must comply with the SEC’s requirements for traditional paper filings, as outlined in Rule 302 of Regulation S-T. This involves manual signatures from the authorized officers or directors of the company.

The Filing and Follow-Up Process

The complete paper version of the filing, accompanied by the properly executed Form TH, must be filed with the Commission no later than one business day after the date the electronic filing was originally due. The temporary hardship exemption is not a waiver of the electronic filing obligation but merely a delay. The filer is required to submit a confirming electronic copy of the document through the EDGAR system.

The deadline for this confirming electronic copy is within six business days of the date the paper filing was made. This electronic submission has its own formatting requirements. A specific legend must be included at the very top of the electronic document, consisting of the tag <PAPER>, and the document must conclude with the corresponding end tag, </PAPER>. The signatures from the paper version are conformed in the electronic copy by typing the names of the signatories, often preceded by “/s/”.

Failure to comply with the six-day deadline for the confirming electronic copy carries significant consequences. If the electronic version is not filed on time, the original filing will be deemed not to have been filed, making the company delinquent in its reporting obligations. This delinquency can render the company ineligible to use certain short-form registration statements, such as Form S-3, and may trigger disclosure of the late filing in future proxy statements under Item 405 of Regulation S-K.