Yesterday, the Securities and Exchange Commission issued an Order granting conditional regulatory relief from certain filing obligations under the Securities Exchange Act of 1934 for companies facing challenges in meeting filing deadlines as a result of the coronavirus disease 2019 (“COVID-19”). The Order primarily grants a 45-day extension for filing Exchange Act reports (e.g., Forms 10-K, 20-F and 10-Q) due between March 1, 2020 and April 30, 2020. For companies preparing for upcoming annual meetings, the Order also exempts companies from requirements to furnish soliciting materials and information materials in certain circumstances.
To take advantage of the filing extension, companies unable to meet their filing deadlines as a result of COVID-19 must furnish a Form 8-K or 6-K by March 16 (or the original fling deadline if later), which includes:
- A statement that the company is relying on the Order;
- A summary of the reasons why the report, schedule or form could not be timely filed;
- The estimated date by when the filing is expected to be filed; and
- If applicable:
- A risk factor, if appropriate and material, explaining the impact of COVID-19 on the business; and/or
- An exhibit signed by any person other than the company explaining the inability of such person to furnish any required opinion, report or certification, if that inability is the reason why the subject filing cannot be timely filed.
Any filing submitted on a delayed basis in accordance with the Order must also include a statement that the company is relying on the Order and a brief explanation as to why the filing was not made on a timely basis. Based on the Order, some example explanations relating to COVID-19 might include disruptions to transportation and limited access to facilities, support staff, and professional advisors. Companies complying with the Order will still be considered “current” and “timely” for maintaining Form S-3, Form S-8 and Rule 144 eligibility, assuming they otherwise satisfy the applicable requirements. Notwithstanding the Order, however, companies are encouraged to review the terms of any contractual filing commitments (such as material debt agreements), since the precise contractual language applicable to those obligations, and not the Order, will govern whether late filing and/or delivery will be excused in these circumstances.
In connection with the Order, the SEC’s Division of Investment Management released guidance for investment advisers and funds that offers certain conditional accommodations regarding in-person meeting requirements that may be difficult to satisfy in the event of unforeseen or emergency circumstances stemming from COVID-19.
These actions are another demonstration of the SEC’s quick response to market developments and the balance that can be achieved between market demands for timely disclosure and the practical realities of meeting those demands in light of significant challenges, such as COVID-19. Even for companies not taking advantage of relief under the Order, Chairman Clayton has encouraged all companies to consider material risks to their business and their associated disclosure obligations with respect to COVID-19. Public companies should continue to watch for future SEC news and guidance related to the above accommodations and other disclosure considerations.
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