On March 4th, the SEC announced that it will provide conditional regulatory relief for certain publicly traded company filing obligations under the federal securities laws due to the impact of the Coronavirus Disease 2019 (COVID-19). These impacts may present challenges for certain companies that are required to provide information to trading markets, shareholders, and the SEC. These companies may include US companies located in or companies with operations in affected areas.
Tuesday, March 10. 2020
The SEC has issued an order that, subject to certain conditions, provides publicly traded companies with an additional 45 days to file particular disclosure reports that would otherwise have been due between March 1st and April 30th, 2020. As part of those conditions, companies must convey through a current report a summary of why the relief is needed in their circumstances. The SEC may extend the time period for the relief, add other conditions it deems appropriate, or offer additional relief measures as necessary.
The SEC order, which expresses due regard for the needs and safety of companies impacted by COVID-19, states companies seeking to rely upon the order should direct their attention to its various conditions, including the requirement to furnish a Form 8-K or Form 6-K by the later of March 16 or the original compliance date. In addition, the SEC is taking the following positions regarding certain obligations under the Securities Act and the Exchange Act:
- For purposes of eligibility to use Form S-3 (and for well-known seasoned issuer status), a company relying on the new order will be considered current and timely in its Exchange Act filing requirements if that company was current and timely as of the first day of the relief period and it files any report due during the relief period within 45 days of the filing deadline for the report.
- For purposes of the Form S-8 eligibility requirements and the current public information eligibility requirements of Rule 144(c), a company relying on the new order will be considered current in its Exchange Act filing requirements if that company was current as of the first day of the relief period and it files any report due during the relief period within 45 days of the filing deadline for the report.
- Companies that receive an extension on filing Exchange Act annual reports or quarterly reports pursuant to the order will be considered to have a due date 45 days after the filing deadline for the report. Therefore, those companies will be permitted to rely on Rule 12b-25 if they are unable to file the required reports on or before the extended due date.
The SEC also reminds all companies to provide investors with insight regarding their assessment of and plans to address risks to their business operations due to the coronavirus. This knowledge will keep investors and markets informed of material developments. The SEC encourages all companies and other related persons to consider their activities in light of their disclosure obligations under the federal securities laws. For example, where a company has become aware of coronavirus-related risks that would be material to investors, that company should refrain from engaging in securities transactions with the public and to take steps to prevent directors and officers (and other corporate insiders who are aware of these matters) from initiating such transactions until investors have been appropriately informed about the risk. When companies do disclose material information related to the impacts of the coronavirus, they are further reminded to avoid selective disclosure and disseminate material information broadly. Depending on a company’s particular circumstances, it should consider whether it may need to revisit, refresh, or update previous disclosure to the extent that the information becomes inaccurate. Companies providing forward-looking data that keeps investors informed about material developments (including the known and predicted effects of coronavirus) can avail themselves of the safe harbor in Section 21E of the Exchange Act for forward-looking statements. The Division of Investment Management has also issued a staff statement that addresses certain in-person board voting requirements under the Investment Company Act of 1940, which is available here.
Those companies and other affected persons who may require additional or different assistance in their efforts to comply with the requirements of the federal securities laws are encouraged to contact SEC staff. Registrants facing administrative difficulties in the filing process (e.g., inability to obtain a required signature due to an executive officer being located in a quarantined zone) are encouraged to contact the staff who will be available to help address these issues. SEC staff will address these and any issues on a case-by-case basis. Filer Support is operating and available as it normally is.
SEC Provides Conditional Regulatory Relief and Assistance for Companies Affected by the Coronavirus Disease 2019 (COVID-19) (www.sec.gov)
Order Under Section 36 of the Securities Exchange Act OF 1934 Granting Exemptions from Specified Provisions of the Exchange Act and Certain Rules Thereunder (www.sec.gov)
Division of Investment Management Staff Statement on Fund Board Meetings and Unforeseen or Emergency Circumstances Related to Coronavirus Disease 2019 (COVID-19) (www.sec.gov)