Filing Fee Disclosures Modernized by SEC in 2022

In late 2021, the SEC adopted a new mandate that would transform how fees were filed for registration statements and revealed tender offers. The Filing Fees and Payment Method Modernization final rule is extensive and is being implemented in phases. The first phase began on January 31, where companies were required to submit their exhibits in HTML. Come July 31, 2024; the next phase begins as Large Accelerated Filers will have to submit fee data in Inline XBRL (iXBRL). Following this, the final phase will be adopted on July 31, 2025, where all other filers will be included.  

As these changes begin, it is imperative for filers, issuers, preparers, and financial staff to learn more about the mandate and begin preparations to comply with these updates in the future.

Why is the SEC Making The Changes with Fee Disclosure Filing in 2022?

  1. To Reduce Errors from Manual Fee Processes 

Currently, the processes being followed to report fees are riddled with instances that pave the way for human error. The existing SEC rules ask issuers to present tables and footnotes basis which fees owed to the SEC are calculated. This is then entered manually into the EDGAR submission header. This also translates to more manual work for SEC staff who manually review every fee-bearing filing due to increased error instances.

2. To Standardize Table Formats 

With a modification to the layout and location of the current fee table, the SEC aims to reduce errors and improve the quality of fee data. According to the mandate, from January 31, 2022, all fee calculation tables will align with the new layout with additional columns and more filing inputs.

3. To Enhance Data Usability 

With an objective to structure the fee tagging, the SEC hopes that the changes introduced will help filers and issuers meet their compliance requirements with more ease. When transitioning to iXBRL in 2024, they may not find a huge gap when working with interactive data.

What are the Changes that SEC is Introducing in 2022? 

Improved Fee Tables

The SEC is adding three new fee tables where the required disclosure and format will depend on the filing and fee data being reported.

Changes in EDGAR System 

The EDGAR system will be updated to support the fee table changes from January 31, 2022. The following changes can be seen:

  • A stand-alone exhibit document for the Filing Fee Calculation table and associated footnotes.
  • The new EDGAR exhibit will be called EX-FILING FEES.
  • Filings that pay fees will have to comply with the table, including:
    • Registration statements and prospectuses filed under Rule 424(b)
    • Proxies
    • Tender offers
  • Filings will have to be in HTML format until Inline XBRL is mandated.
  • EDGAR submission headers will include a new tag, “Fee table included,” to indicate when a fee is being paid.
  • EDGAR will suspend applicable fee-bearing submissions that do not include the required submission header change(s) and exhibit.

Phasing-in Schedule to Trial iXBRL Fee Data Tagging 

In order to facilitate early testing of tagged fee data, the EDGAR system is being updated now before the iXBRL mandate kicks in.  

How can You be Prepared? 

In order to successfully prepare for the first phase of the modernization of the SEC Filing Fee, you can consider the following steps: 

  • Modify your disclosures to align with the new SEC-mandated fee table layout.
  • Outsource the filing to a reliable service provider like DataTracks, who can meet both the disclosure and technical changes with efficiency and agility.
  • Check the test filing to ensure there are no fee warnings or errors. This could cause a live filing to suspend.

However, we have got your back when it comes to compliance reporting for SEC. We support finance professionals in over 800 companies for their SEC compliance requirements.  Do get in touch to understand how we can simplify your compliance reporting process.