Corp Fin has posted four new COVID-19-related FAQs, most of which concern the interaction of Form S-3 and the SEC’s COVID-19 Order. As you know, in the COVID-19 Order, the SEC provided public companies that are unable to file timely “due to circumstances related to COVID-19” with conditional 45-day extensions to file or furnish specified SEC various reports, schedules and forms that would otherwise have been due between March 1 and July 1, 2020, provided they comply with certain requirements (see this PubCo post).  If  a company does not file a required report on the original due date in reliance on the COVID-19 Order, what does that mean for its use of Form S-3?

Covid-19 Order 

Required disclosure. To properly rely on the COVID-19 Order, the company must file a Form 8-K (or Form 6-K, if applicable), which must disclose specific information:

  • “that [the company] is relying on the COVID-19 Order;
  • a brief description of the reasons why the registrant could not file the subject report, schedule or form on a timely basis;
  • the estimated date by which the report, schedule or form is expected to be filed; and
  • a company-specific risk factor or factors explaining the impact, if material, of COVID-19 on the registrant’s business.”

If the company is unable to timely file because any person, other than the company, is unable to furnish a required opinion, report or certification, the company must provide, as an exhibit to the Form 8-K or Form 6-K, a statement signed by the person indicating the specific reasons why he or she is unable to furnish the required opinion, report or certification on or before the original due date of the report.

In the report, schedule or form that is filed on a delayed basis, the company  must disclose that it is relying on the COVID-19 Order and explain why it could not timely file.

Form S-3

Takedowns using an effective registration statement.  The COVID-19 Order does not specifically apply to registration statements.  However, a company may continue to conduct takedowns under an effective Form S-3, even if it has relied on the COVID-19 Order for its Form 10-K, so long as the company determines that the prospectus complies with Section 10(a) of the Securities Act.  Section 10(a)(3) requires that, when a prospectus is used more than nine months after the effective date of the registration statement, the information in the registration statement must be as of a date not more than 16 months prior to that use, so far as the information is known to the company (or other user) or can be furnished by the company without unreasonable effort or expense. In addition, Rule 415 shelf offerings require an undertaking to reflect in the prospectus any facts or events arising after the effective date of the registration statement which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding that “so far as information is known or can be furnished without unreasonable effort or expense” qualification, the staff cautions that, if the information is older than 16 months, companies “and their legal advisers will need to determine when it is appropriate to update the prospectus. Registrants are responsible for the accuracy and completeness of their disclosure.”

Reassessing S-3 eligibility.  When a company with an effective Form S-3 files its Form 10-K, that 10-K functions as a Section 10(a)(3) update to the S-3, and the company is required at that point to reassess its Form S-3 eligibility.  Under Rule 401(b), when a company files a 10(a)(3) amendment, the form and contents must conform to the applicable rules and forms as in effect on the amendment filing date. If a company properly relies on the COVID-19 Order, the Order extends the due date for the Form 10-K, with the result that the company must reassess its eligibility when it eventually files the Form 10-K.  (By comparison, a Form 12b-25 filing does not extend the original due date of a report. See this PubCo post.) When the company files the Form 10-K, it must meet all of the requirements of Form S-3, including the requirement that the company has made all filings required under Section 13, 14 or 15(d) for at least 12 calendar months immediately preceding the Section 10(a)(3) update. If all the conditions of the COVID-19 Order are met, and the 10-K is filed by its extended due date, it will be considered timely. See the SEC Press Release.

Filing a new Form S-3.  If a company is relying on the COVID-19 Order and has not yet filed its required periodic report under the extended due date, the company can still file—and the staff will accelerate—a new Form S-3. Between the original due date of a required filing and the extended due date, the staff will consider the company to be current and timely in its reporting so long as the company properly files the Form 8-K disclosing all of the prescribed information.  (See the first FAQ above, and keep in mind the second.)  If the company does not file the required report by the extended due date, it will lose S-3 eligibility because it will no longer be current and timely. Although companies can certainly contact the staff to explain their capital-raising needs with “compelling and well-documented facts,” it appears from the FAQ that persuading the staff to accelerate the Form S-3 under those circumstances—at least prior to the actual filing of the required report—will be quite an uphill climb: companies “relying on the COVID-19 Order should note that the staff will be unlikely to accelerate the effective date of a Form S-3 until such time as any information required to be included in the Form S-3 is filed.”

Interestingly, the FAQs were not included in the staff’s CDIs because the “responses relate to unique circumstances arising from COVID-19.”


Posted by Cydney Posner