SEC Guidance on Paying For Filings With Plan Assets

[Rafael]

Hello, I was wondering if anyone knew of any SEC guidance concerning whether filings such as the Form 11-K could be paid with plan assets.

There is some scant DOL guidance on the issue of paying for expenses that benefit the employer from plan assets, but none that specifically mention SEC filings. 

[PensionPro]

On the basis of DOL guidance it seems to be a fiduciary rather than a settlor expense that may be paid from plan assets as the filing is required to keep the plan in compliance with SEC regulations as long as the fees are reasonable and permitted by the plan etc.

[Rafael]

That is my current interpretation of how it should be treated given it is not a discretionary action or expense and that any benefit the employer receives is incidental. 

However, there may be an argument that since the 11-K relates to securities held in the plan issued by the company, the ultimate benefit of the annual filing is for the company and not the plan.

I just want to make sure there is no obvious SEC guidance on the issue that has passed by.

[Larry Starr]

Well, you need to be a little more specific.  I am going to guess you are talking about an employee stock purchase plan (such as a 401(k) with company stock) and you are talking about the 11-K that is required to be prepared by the plan.  Clearly, that is a requirement leveled on the PLAN and should be an allowable expense to be paid by the plan.

This would NOT be SEC guidance, but would fall within the DOL purview. 

However, this is a complicated issue and there should be very competent lawyers involved who understand that SEC registration rules.  There is a special rule that might apply:

 Employee stock purchase plans of publicly traded companies must make their own Securities and Exchange Commission filings. This is to ensure that investors, including company employees, have access to timely, accurate data regarding the issuing company's financials.

Form 11-K is required to be filed even though the issuer of the securities also files its own annual reports under Section 13(a) or 15(d) of the Exchange Act. However, Rule 15d-21 under the Exchange Act provides that in certain cases the information required by Form 11-K may be disclosed for the plan as a part of the issuer’s own annual report. Reports on Form 11-K must be filed within 90 days after the end of the fiscal year of the plan, except that plans subject to ERISA have a filing deadline of 180 days after the plan’s fiscal year end.

[Rafael]

Thanks!

For future reference (for myself and in case the question comes up again):

https://www.sec.gov/corpfin/cf-manual/topic-15