In October 2021, the SEC adopted the Filing Fees and Payment Method Modernization final rule. The mandate is far-reaching and transforms how filing fees in registration statements and fee-bearing proxies and tender offers are disclosed. The changes are designed to help the SEC and filers by minimizing errors and making fee tables consistent across filings and filers. The SEC is implementing the fee disclosure and technical changes in stages to help filers prepare to comply. Nearly every filer who submits a registration statement or filing with fees to the SEC will be required to tag their fee data in Inline XBRL (iXBRL). There are two exceptions to the mandate:
- Asset-backed issuers (ABS) may voluntarily tag their fee data but are not required to.
- Closed end funds who file on Form N-2 may disclosure annually (reported to the SEC on Form 24F-2 in XML format) instead of with their registration statements and prospectuses.
The new requirements expand the use of iXBRL significantly in 1933 Securities Act filings and any fee bearing proxy or tender offer, beyond current financial statements tagging.
Stage 1: Implemented consistent fee tables filed as an exhibit
On Jan. 31, 2022, filers needed to comply with the first stage of the rule. The SEC required filers to:
- Report fee data in an exhibit instead of on the filing cover.
- Format the data consistently.
These changes were designed to create fee tables that were well structured to be effectively tagged in iXBRL.
We continue to engage filers who have questions regarding fee data disclosures and will offer a series of posts in the future to clarify some of these scenarios.
Stage 2: Planned Beta testing of fee data tagged in iXBRL
On June 16, 2023, the SEC announced the next stage of the rule implementation: an EDGAR Filing Fee Beta testing environment. The Beta environment gives filers the opportunity to test constructing and submitting filing fee exhibits in iXBRL. The Beta environment is only for testing, and filers will continue to submit filing fee exhibits in HTML via EDGAR, during the testing period.
- Filers must sign up for the Beta testing no later than Aug. 31, 2023
- Information related to completing Beta testing will be published by the SEC in September 2023
- Beta testing must be completed between Oct. 2, 2023 – Dec. 22, 2023
(Review the full announcement from the SEC for details on how to sign up for Beta testing.)
Stage 3: Phase-in iXBRL tagging of fee data in live submissions
The SEC is phasing in the iXBRL tagging of fee data based on filer status. All filers will have the opportunity to submit live, tagged fee data after the Beta testing period and prior to the mandatory compliance dates.
- The voluntary compliance period for submission of iXBRL fee exhibits starts Jan. 31, 2024
- Large accelerated filers are required to begin tagging their filing fee exhibits on July 31, 2024
- All other filers are required to begin tagging on July 31, 2025
It is critical for issuers and legal staff who manage transactional filings to understand these changes and be prepared to comply with the upcoming SEC requirements. Participating in the SEC Beta testing and early voluntary tagging of fee data can help ensure that filings will be accepted with no issues.
See our previous blog post (SEC Launches Modernization of Filing Fee Disclosures, Effective January 31, 2022. Inline XBRL is Next.) for more details, and stay tuned for future posts as we explore the new Beta testing environment and review implementation plans in more detail.
Toppan Merrill is here to help.
For 55+ years, the dedicated SEC reporting experts at Toppan Merrill have supported issuers navigating the regulatory disclosure and filing process. Visit our SEC reporting page to learn more – or connect with one of our experts at firstname.lastname@example.org or by calling 800.688.4400.