Legal Alert

SEC’s Division of Corporation Finance Releases Four COVID-19 Related FAQs

by the Securities and Capital Markets Group
May 6, 2020

On May 4, 2020, the staff of the Division of Corporation Finance (the Staff) of the United States Securities and Exchange Commission (Commission) released guidance in the form of four frequently asked questions (FAQs) related to the Commission’s COVID-19 Order released on March 25, 2020 (the COVID 19 Order). A link to the original Order can be found here.

The first FAQ addresses what Current Report on Form 8-K (8-K) related disclosure is required to the extent a registrant wishes to avail itself of the COVID 19 Order’s extending filing deadlines. This FAQ clarifies that to take advantage of an extended filing deadline under the COVID-19 Order, a registrant must make certain prescribed disclosures in the 8-K (or Form 6-K, if applicable) and in the report, schedule or form that is filed on a delayed basis, with such disclosures outlined in the FAQ.

In the other three FAQs related to Registration Statements on Form S-3 (S-3), the Staff:

  1. affirmed that a registrant may continue to conduct shelf takedowns using an already-effective registration statement while relying on the COVID-19 Order for a periodic report, including an Annual Report on Form 10-K (10-K);
  2. clarified that in situations where registrants are relying on the portion of COVID-19 Order which provides that Section 10(a)(3) will not prevent a registrant from using a prospectus containing information more than 16 months old that such registrants will still need to review the prospectus and update the disclosure in the prospectus if necessary to comply with the disclosure requirements under applicable federal laws, rules and regulations;
  3. clarified that a registrant must reassess its S-3 eligibility, consistent with Rule 401, when it files its 10-K that serves as a Section 10(a)(3) update to its S-3; accordingly, when a registrant properly relies on the COVID-19 Order then the due date for the10-K is extended and the proper date for the company to reassess its eligibility to use S-3 is the date on which it files its 10-K;
  4. clarified that if a registrant has properly furnished its 8-K required by the COVID 19 Order, the Staff will consider the registrant both timely and current in its reporting under the Exchange Act of 1934, as amended, and therefore eligible to file a new S-3, provided that to the extent a registrant does not file the next periodic report by the extended due date as provided by the COVID 19 Order, it will no longer be considered timely and current, and will no longer be eligible to file a S-3;
  5. warned that for those registrants relying on the COVID-19 Order, the Staff will be unlikely to accelerate the effective date of a S-3 until such time as any information required to be included in the S-3 is filed; and
  6. invited registrants with compelling and well-documented facts to contact the Staff to discuss their specific needs.

 The full COVID-19 Related FAQs can be found here.

Copyright © 2020 by Ballard Spahr LLP.
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

Subscribe to Ballard Spahr Mailing Lists

Get the latest significant legal alerts, news, webinars, and insights that affect your industry.