What changed between these versions
A substantive change. v2 introduces a new exemption from the Electronic Signatures in Global and National Commerce Act (ESIGN Act) for electronic delivery of regulatory documents under this bill, streamlining the process for covered entities. Additionally, definitions related to electronic delivery and websites were refined, and a minor clarification was made regarding the application of the bill to other federal statutes.
Overview
A handful of substantive changes, primarily concentrated in the core electronic delivery provisions and definitions. · v2 clarifies and expands the scope of electronic delivery by providing a specific exemption from the ESIGN Act and refining definitions to offer more flexibility and specificity in implementation.
The most significant change in v2 is the addition of a new Section 2(c), which explicitly exempts regulatory documents delivered under this Act from the consumer consent requirements of Section 101(c) of the ESIGN Act. This change simplifies the process for covered entities to transition to electronic delivery. Furthermore, the definition of 'electronic delivery' was refined to specify notice delivery to an electronic address and to broaden the scope of acceptable electronic methods. The definition of 'website' was also adjusted, and a minor clarification was made to the rule of application concerning federal statutes requiring 'paper' versus 'written' documents.
Major additions
This new subsection states that Section 101(c) of the Electronic Signatures in Global and National Commerce Act (ESIGN Act) shall not apply to a regulatory document delivered in accordance with this section. Section 101(c) of the ESIGN Act generally requires consumer consent to electronic delivery, among other conditions.
This addition significantly streamlines the process for covered entities to deliver regulatory documents electronically by removing the requirement for explicit consumer consent under the ESIGN Act. It simplifies compliance for entities opting for electronic delivery, potentially accelerating the shift from paper to electronic disclosures.
Modifications
This is a purely technical modification to correct a cross-reference due to the insertion of a new Section 2(c) in v2, which re-lettered subsequent subsections. There is no operative policy change.
Before
This paragraph set forth requirements for the timing and content of a notice of website availability, referring to 'subsection (f)(3)(B)'.
After
This paragraph now refers to 'subsection (g)(3)(B)' for the appropriate notice described.
This modification clarifies the scope of the bill's electronic delivery provisions. By specifying 'paper documents,' it ensures that the bill does not override federal statutes that explicitly mandate physical, tangible document delivery, distinguishing such requirements from those that merely specify 'written' documents, which could potentially include electronic forms. This narrows the potential override of existing statutes.
Before
The rule of application stated that the subsection would not apply if a Federal statute specifically requires delivery of 'written documents' to investors.
After
The rule of application now states that the subsection will not apply if a Federal statute specifically requires delivery of 'paper documents' to investors.
This modification adds specificity to the electronic delivery process, ensuring that the notice of website availability is sent to a designated electronic address of the investor. This provides a more direct and traceable form of notification, potentially enhancing investor assurance of receipt.
Before
Defined 'electronic delivery' to include the posting of a regulatory document to a website and direct electronic delivery of an appropriate notice of availability to the investor.
After
Defined 'electronic delivery' to include the posting of a regulatory document to a website and direct delivery of an appropriate notice of availability to 'an electronic address of the investor'.
This change broadens the scope of permissible electronic delivery methods. By using 'any other electronic method,' the bill allows for greater flexibility and innovation in delivery approaches beyond the specific examples listed in subparagraphs (A) and (B), provided they are reasonably designed to ensure investor receipt.
Before
Defined 'electronic delivery' to include 'an electronic method reasonably designed to ensure receipt of such regulatory document by the investor'.
After
Defined 'electronic delivery' to include 'any other electronic method reasonably designed to ensure receipt of such regulatory document by the investor'.
This modification broadens the definition of 'website' by removing the explicit condition of 'reasonable access' being provided within the definition itself. While reasonable access remains a practical necessity for effective electronic delivery, its removal from the definition might offer covered entities more flexibility in how they define and utilize their digital platforms, potentially shifting the emphasis on ensuring access from the definition to the implementation rules.
Before
Defined 'website' as an internet website or other digital repository, such as a mobile application, 'to which an investor of a covered entity has been provided reasonable access'.
After
Defined 'website' as an internet website or other digital repository, 'including a mobile application'.
Scope
Meaningful expansion or narrowing — Changes are concentrated in the core electronic delivery provisions and definitions within Section 2 of the bill. — v2 represents a refinement and clarification of the electronic delivery framework, particularly by addressing the interaction with the ESIGN Act and providing more flexibility in delivery methods. It reinforces the bill's original policy direction of facilitating electronic delivery. — The new Section 2(c) directly interacts with and overrides a specific provision of the ESIGN Act for the purposes of this bill, significantly impacting the legal framework for electronic delivery. The definition changes also affect the interpretation and implementation of electronic delivery throughout the bill.
Impact analysis
Covered entities (e.g., investment companies, brokers, dealers, investment advisers)
Gain (reduced compliance burden, increased flexibility in electronic delivery methods).
They are now explicitly exempt from Section 101(c) of the ESIGN Act when delivering regulatory documents electronically under this bill, and have more flexible options for electronic delivery methods and website definitions.
Investors receiving regulatory documents electronically
Procedural change (clarified notification methods, shift to opt-out for ESIGN Act purposes, potentially less explicit 'reasonable access' requirement in website definition).
The process for receiving notices of website availability is more specifically defined (to an 'electronic address'). The removal of the ESIGN Act consent requirement means investors will be defaulted to electronic delivery unless they opt-out, rather than requiring opt-in.
Federal statutes requiring specific document delivery formats
Clarification (narrows the potential override of existing statutes, providing more certainty).
The bill's rule of application now explicitly distinguishes between statutes requiring 'written documents' and those requiring 'paper documents', clarifying when electronic delivery provisions apply.