The U.S. Securities and Exchange Commission has proposed Regulation E-Delivery, a framework that would permit issuers, broker-dealers, investment advisers, investment companies, and other regulated parties to use electronic delivery as the default method for most information required under federal securities laws—without first obtaining affirmative consent from each recipient.

The proposal is not yet final. Comments will be due 60 days after Federal Register publication.

Regulation E-Delivery would cover a broad range of materials, including:

• Prospectuses and shareholder reports
• Proxy and information statements
• Tender-offer materials
• Trade confirmations
• Form CRS disclosures
• Form ADV Part 2 brochures

The proposal would apply across a wide range of regulated entities: public companies, registered investment companies (mutual funds, ETFs, closed-end funds), broker-dealers, investment advisers, transfer agents, and other parties subject to SEC disclosure obligations.

A recipient generally must have provided an electronic address (such as an email address or mobile number) before electronic delivery may be used as the default. The SEC has not proposed to permit delivery to addresses obtained without the recipient's knowledge.

The sender must provide prominent notice of the electronic delivery arrangement. The notice must be clear and conspicuous, informing the recipient that documents will be delivered electronically and explaining how to access them.

Recipients must retain the right to opt out of electronic delivery and receive paper copies. The opt-out mechanism must be accessible and easy to use.

Paper copies must remain available free of charge upon request. Regulated entities may not condition access to paper copies on payment of a fee.

Materials containing personal financial information generally could not be attached directly to electronic communications. Instead, the sender would provide a secure access notice or link, directing the recipient to a secure portal or website where the document can be retrieved. This requirement is designed to reduce the risk of sensitive financial data being intercepted or misdirected.

Existing paper recipients could be transitioned to electronic delivery only after receiving two paper notices explaining the change and their opt-out rights. This two-notice requirement is intended to ensure that recipients who have historically received paper documents are not switched to electronic delivery without adequate warning.

The proposal would require regulated entities to have procedures for identifying and remediating failed electronic deliveries—situations where an electronic communication is returned as undeliverable or where the recipient does not access the document within a specified period.

The SEC also proposes to:

• Rescind Investment Company Act Rule 30e-3, which currently provides an alternative framework for electronic delivery of fund shareholder reports. Rule 30e-3 would be superseded by the broader Regulation E-Delivery framework.
• Amend rules governing proxy solicitations, to align proxy-delivery procedures with the new electronic-default framework.
• Amend rules governing tender-offer communications, to permit electronic delivery of tender-offer materials as the default.

Public companies should evaluate whether their investor-communication systems can satisfy the proposed notice, website-access, opt-out, and paper-request requirements. Account agreements and privacy notices may require revision. Contracts with mailing agents, transfer agents, and digital-communications vendors should be reviewed to confirm they can support the new framework.

Registered investment companies should assess the impact of the proposed rescission of Rule 30e-3 and determine whether their current electronic-delivery arrangements comply with the new requirements. Fund prospectuses, shareholder reports, and proxy materials would all be subject to Regulation E-Delivery.

Broker-dealers should review their trade confirmation and Form CRS delivery procedures. The privacy requirement for personal financial information—prohibiting direct attachment and requiring secure-access links—may require changes to existing email and portal systems.

Investment advisers should assess their Form ADV Part 2 brochure delivery procedures and evaluate whether their client-communication systems can satisfy the proposed requirements. The two-notice transition requirement would apply to existing clients who currently receive paper brochures.

Transfer agents, who often manage investor-communication logistics on behalf of issuers, should evaluate whether their systems can support the notice, opt-out, paper-request, and failed-delivery remediation requirements across multiple issuer clients.

The proposal could materially reduce printing and postage costs for issuers, funds, and other regulated entities. However, it would create new operational and evidentiary requirements for proving compliant electronic delivery—including documentation of notice delivery, opt-out requests, paper-copy requests, and failed-delivery remediation.

Cybersecurity controls would also require attention, particularly for the secure-access portal or link requirement applicable to materials containing personal financial information.

Comments will be due 60 days after Federal Register publication. Regulated entities, industry associations, investor advocates, and other interested parties are encouraged to submit comments addressing the proposed requirements, transition procedures, and cost-benefit analysis.

This alert is provided for informational purposes only and does not constitute legal advice. For guidance on how Regulation E-Delivery may affect your specific compliance obligations, please contact ULF New York.