23 May 2013

Use of Email to Satisfy Mail Delivery Requirements of SEC Disclosure Rules

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Use of Email to Satisfy Mail Delivery Requirements of SEC Disclosure Rules

We were recently asked to review the disclosure by mail delivery requirements of US Securities and Exchange Commission (SEC) Rule 14d-4. In summary, RPost’s patented technology is uniquely positioned to serve as an alternative to delivery by postal mail while meeting requirements for these disclosure notices. Please review the legal analyses for further details.

Our review of this SEC rule provides that the mail requirements would be governed by the Uniform Electronic Transactions Act (UETA) and Federal ESIGN law, with ESIGN’s provision for “functional equivalence” prevailing in that while the SEC Rule 14d-4 instructs to send by first class mail, there is nothing in the Rule that would explicitly pre-empt the Federal ESIGN provision of “functional equivalence”.

As summarized in the legal analyses, RPost’s Registered E-mail® service, under UETA and ESIGN, can serve as the functional equivalent of paper mail, to be used in lieu of certified mail, registered mail, return receipt mail, private express mail services, fax logs and similar types of paper mail services. RPost’s Registered E-mail® service provides a record of sending and receiving in accordance with the UETA by recording the recipient’s server’s receipt thereof.

RPost Registered Email service delivers the notice directly to the recipient’s inbox. RPost is not a ‘store and forward’ system in that RPost services do not send a notice requiring the recipient to come to a website to collect/download the document. We believe the latter “store-and-forward website systems” would not satisfy the disclosure by mail requirements unless one had a record that the document was in fact downloaded and the content downloaded was the full content and in a form available for reading by the consumer.

Further, if the notice is sent attached to an RPost Registered Email message, we recommend that if sending it as a PDF attachment, one attach a second copy of the content as a text (.TXT) file to eliminate all software pre-requisites (i.e. proprietary PDF reader program) to read the disclosure notice. Alternatively, one could place the notice in the body of the email itself or only as an attached text file.