Last week, SEC officials suggested that the SEC might provide relief to address the impact of the coronavirus (see this PubCo post), and today, the SEC came through, issuing an order providing “conditional regulatory relief for certain publicly traded company filing obligations.” As SEC Chair Jay Clayton observed, the “health and safety of all participants in our markets is of paramount importance. While timely public filing of Exchange Act reports is a cornerstone of well-functioning markets, we recognize that this situation may prevent certain issuers from compiling these reports within required timeframes.”  According to the order, a number of companies have advised the staff that the coronavirus “may present challenges in timely meeting certain of their obligations under the federal securities laws. These entities may include U.S. companies with significant operations in the affected areas, as well as companies located in those regions.” The SEC encourages companies to contact SEC staff with questions or matters of particular concern, such as administrative issues related to inability to obtain a required signature due to a quarantine or other issues that may need to be addressed on a case-by-case basis.

To address potential compliance issues, the order “provides publicly traded companies with an additional 45 days to file certain disclosure reports that would otherwise have been due between March 1 and April 30, 2020.”  But it’s not a total gimme—there are conditions to satisfy.  Most important, the companies must be unable to file timely due to circumstances related to the coronavirus, and the companies must submit Forms 8-K or 6-K, by the later of March 16 or the original reporting deadline, summarizing, among other things, “why the relief is needed in their particular circumstances.” Timely filing could be impeded by, for example, “[d]isruptions to transportation, and limited access to facilities, support staff, and professional advisors as a result of COVID-19.”  The SEC will continue to monitor the situation and “may, if necessary, extend the time period during which this relief applies, with any additional conditions the Commission deems appropriate and/or issue other relief.”

The SEC cautioned, however, that companies must “continue to evaluate their obligations to make materially accurate and complete disclosures in accordance with the federal securities laws.” In that regard, Clayton reminded companies of the need

“to provide investors with insight regarding their assessment of, and plans for addressing, material risks to their business and operations resulting from the coronavirus to the fullest extent practicable to keep investors and markets informed of material developments.  How companies plan and respond to the events as they unfold can be material to an investment decision, and I urge companies to work with their audit committees and auditors to ensure that their financial reporting, auditing and review processes are as robust as practicable in light of the circumstances in meeting the applicable requirements. Companies providing forward-looking information in an effort to keep investors informed about material developments, including known trends or uncertainties regarding coronavirus, can take steps to avail themselves of the safe harbor in Section 21E of the Exchange Act for forward-looking statements.”  (See this PubCo post.)

As a reminder, the press release offers these additional “disclosure considerations”:

  • If a company is aware of a material risk related to the coronavirus, it should take steps to prevent insiders from insider trading and refrain from engaging in securities transactions with the public until investors have been advised of the risk
  • Companies should avoid selective disclosure of the risks
  • Companies should consider updating previous disclosure where the information has become materially inaccurate
  • Companies may want to take steps to take advantage of the safe harbor in Section 21E for any forward-looking information about known trends or uncertainties regarding the coronavirus

For companies that rely on the order, the staff will take the following positions:

  • For purposes of S-3 (or WKSI) eligibility,  the company “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 Form S-8 eligibility and Rule 144(c) current public information requirements, the company “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 will be permitted to rely on Rule 12b-25 if they are unable to file the required reports on or before the extended 45-day due date available under the order.

The Order. More specifically, the order exempts companies (and persons) from requirements to make filings under Exchange Act sections “13(a), 13(f), 13(g), 14(a), 14(c), 14(f), 15(d) and Regulations 13A, Regulation 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,” provided that specific conditions are satisfied:

  • The company must be unable to file timely “due to circumstances related to COVID-19”
  • The company must furnish to the SEC a Form 8-K or 6-K (described below) by the later of March 1 or the original filing deadline of the report
  • The 8-K or 6-K must:
    • State that the company is relying on the order
    • Provide “a brief description of the reasons why…it could not file such report, schedule or form on a timely basis”
    • State the estimated date by which the report, schedule or form is expected to be filed
    • Include, if appropriate, a risk factor explaining, if material, the impact of COVID-19 on its business
    • If the reason the report “cannot be filed timely relates to the inability of any person, other than the registrant, 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 the specific reasons why such person is unable to furnish the required opinion, report or certification on or before the date such report must be filed.”
  • The report, schedule or form must be filed no later than 45 days after the original due date
  • The report or other filing, when filed, must disclose that the company relied on the order and explain why the company could not file on a timely basis

The order notes that, if a company relies on the order, it would not be required to file a Form 12b-25 so long as the report or other filing is filed within the time period prescribed above. Also worth noting is that the Order does not provide relief for Section 16 reports.

The order also provides relief related to furnishing proxy soliciting materials to security holders “when mail delivery is not possible.” More specifically, the order exempts a company (or person) from the Exchange Act requirements to furnish proxy statements, information statements, annual reports and other soliciting materials where the conditions below are satisfied:

  • 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 of the type or class customarily used by the registrant or other person making the solicitation” and
  • The company (or person) conducting the solicitation has made a “good faith effort” to furnish the soliciting or information materials to the security holder, as required by the applicable rules, including rules applicable to the particular method of delivery.


Posted by Cydney Posner