Upon becoming an insider, or upon the Section 12 registration of that security, Section 16(a) of the Exchange Act requires an insider to file an initial report with the SEC disclosing his or her beneficial ownership of all equity securities of the issuer. 

To keep this information current, Section 16(a) presently also requires insiders to report changes in such ownership (or the purchase or sale of a security-based swap agreement involving such equity security) on a monthly basis within 10 days after the close of each calendar month in which such change in ownership or purchase or sale of a security-based swap agreement occurs.        

Carefully review your in-house materials as they relate to Exchange Act Section 16.  Insider reporting requirements will be changing on

 AUGUST 29, 2002

CURRENT RULE: Report Due 10 DAYS AFTER CALENDAR MONTH ENDS

UPDATE!!! 
AUGUST 29, 2002

NEW RULE:
 Change in ownership report due before the end of the second business day following transaction

On July 30, 2002, the Sarbanes-Oxley Act of 2002(the “Act”) was enacted. Section 403(a) of the Act amends Section 16(a) to require insiders to report such a change in ownership or purchase or sale of a security-based swap agreement “before the end of the second business day following the day on which the subject transaction has been executed, or at such other time as the Commission shall establish, by rule, in any case in which the Commission determines that such 2-day period is not feasible.” The effective date of the Act is August 29, 2002. 

COMING IN 2003

The Act also amends Section 16(a) of the Exchange Act to require, not later than one year following enactment, electronic filing of change of beneficial ownership reports, and website posting of such reports by both the SEC and issuers. Although the Act gives the SEC rulemaking power to extend the second business deadline day, the SEC has indicated that if it does grant certain extensions, it will do only in very limited circumstances.   

WHEN IS A REPORT FILED?
A report is considered “filed” with the SEC when it is received by the SEC, provided that the report will also be considered filed if it is sent by an overnight delivery carrier that guarantees delivery by the required filing date. 

Keep in mind that late filings must be disclosed each year in the issuer’s proxy statement and Form 10-K. 

EDGARIZATION
Electronic filing of Section 16 reports will be required within the next year. Insiders should start converting to electronic filing the reports as soon as possible. Starting on the date electronic filing is required, companies also will be required to post the insider’s reports on their websites. To file via EDGAR, you will need identification numbers, passwords, etc. Use this link to obtain SEC Form ID (UNIFORM APPLICATION FOR ACCESS CODES TO FILE ON EDGAR).

Due to this shortened timeframe, issuers subject to Section 12 of the Exchange should consider the following steps in preparation for the August 29th effectiveness of the foregoing amendments: