On March 25, 2020, the United States Securities and Exchange Commission (SEC) issued a new order (the Order) and guidance (the Guidance) which continued to provide regulatory relief to public companies whose operations may be affected by coronavirus diseases 2019 (COVID-19). In addition, the SEC also issued its current views regarding disclosure considerations and other securities law matters related to COVID-19. Below is a summary of the SEC’s actions.
Public Company Conditional Regulatory Relief
As discussed in our prior publication, on March 4, 2020, the SEC issued an order providing conditional relief for certain public companies affected by the COVID-19 outbreak. The Order supersedes and extends the filing periods covered by the SEC’s earlier order on March 4, 2020.
The Order provides public companies with a 45-day extension to file certain disclosure reports that would otherwise have been due between March 1 and July 1, 2020. Such disclosure reports include materials and any amendment thereto under the Securities Exchange Act of 1934, as amended (the Exchange Act), Sections 13(a), 13(f), 13(g), 14(a), 14(c), 14(f), 15(d) and Regulations 13A, 13D-G (except for those provisions mandating the filing of Schedule 13D or amendments to Schedule 13D), 14A, 14C and 15D, and Exchange Act Rules 13f-1, and 14f-1, as applicable, where the conditions below are satisfied:
- The public company is unable to meet a filing deadline due to circumstances related to COVID-19;
- The public company relying on the Order furnishes to the SEC a Form 8-K or, if eligible, a Form 6-K for each filing that is delayed by the later of March 16 or the original filing deadline of the report stating: (i) that it is relying on the Order; (ii) a brief description of the reasons why it could not file such report, schedule, or form on a timely basis; (iii) the estimated date by which the report, schedule, or form is expected to be filed; (iv) a company specific risk factor or factors explaining the impact, if material, of COVID-19 on its business; and (v) if the reason the subject report cannot be filed timely relates to the inability of any person, other than the public company, to furnish any required opinion, report or certification, the Form 8-K or Form 6-K shall have attached as an exhibit a statement signed by such person stating why such person is unable to furnish the required opinion, report or certification on or before the date such report must be filed;
- The public company or any person files with the SEC any report, schedule, or form required to be filed no later than 45 days after the original due date; and
- In any report, schedule or form filed by the applicable deadline pursuant to paragraph (c) above, the public company or any person must disclose that it is relying on the Order and state the reasons why it could not file such report, schedule, or form on a timely basis.
Furnishing of Proxy and Information Statement Requirements
The Order exempts public companies from delivering proxy statements, annual reports, and other soliciting materials, or information materials provided that: (i) the security holder has a mailing address located in an area where, as a result of COVID-19, the common carrier has suspended delivery service; and (ii) the public company or other person making a solicitation has made a good faith effort to furnish the materials to the security holder in accordance with the applicable rules.
SEC Staff’s Positions
The SEC staff will take the following positions with respect to certain obligations of public companies:
- For purposes of eligibility to use Form S-3 or Form F-3, a company relying on the exemptive order will be considered current and timely in its Exchange Act filing requirements if it 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 exemptive order will be considered current in its Exchange Act filing requirements if it 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 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. As such, 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.
Public Company Disclosure GuidanceThe Guidance provides the SEC staff’s current views regarding disclosure and other securities law obligations that companies should consider with respect to COVID-19 and related business and market disruptions. The SEC staff believed that disclosure of COVID-19-related risks and effects may be necessary or appropriate in management’s discussion and analysis, the business section, risk factors, legal proceedings, disclosure controls and procedures, internal control over financial reporting, and the financial statements. The SEC staff reminded public companies to take the necessary steps to avoid selective disclosures by disseminating material information related to the impacts of COVID-19 broadly to the public. Further, the SEC staff encouraged companies to proactively address financial reporting matters earlier than usual.
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