Over the past two months, the outbreak of coronavirus disease 2019 (COVID-19) has significantly disrupted the ability of public companies based in China, and increasingly throughout the world, to conduct their business operations and to comply with their reporting requirements under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

Recognizing the impact of COVID-19 on issuers that are subject to the reporting requirements of Sections 13(a) or 15(d) of the Exchange Act, the United States Securities and Exchange Commission (the "SEC") issued an exemptive order (the "Order") on March 4, 2020, pursuant to Section 36 of the Exchange Act that provides some relief to such issuers in connection to their obligations to comply with specific provisions contained in the Exchange Act.

Thereafter, on March 13, 2020, the SEC announced guidance (the "Guidance") for public companies that have been impacted by COVID-19 and that wish to modify the date, time or location of their annual or other special shareholder meeting or that wish to change to a "virtual" and/or "hybrid" meeting.

We discuss the material features of the Order and the Guidance below.

Discussion of the Order

Exemptive Relief for Filing Reports

As per the Order, issuers that are required to file reports under the Exchange Act, and other persons required to make filings with respect to such issuers, will have additional time to make certain filings with the SEC under the following conditions:

  1. The issuer (or the person required to make any filings with respect to such issuer) is unable to meet a filing deadline due to circumstances related to COVID-19;
  2. The applicable issuer furnishes to the SEC a Current Report on Form 8-K or, if eligible, a Report of Foreign Private Issuer on Form 6-K, by the later of (A) March 16 or (B) the original filing deadline of the report stating:
    • that it is relying on the Order;
    • a brief description of the reasons why it could not file such report, schedule or form on a timely basis;
    • the estimated date by which the report, schedule or form is expected to be filed;
    • if appropriate, a risk factor explaining, if material, the impact of COVID-19 on its business; and
    • if the reason the subject report cannot be filed timely relates to the inability of any person, other than the issuer, 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.
  3. The issuer (or any person required to make any filings with respect to such an issuer) files with the SEC any report, schedule, or form required to be filed no later than 45 days after the original due date; and
  4. In any report, schedule or form filed by the applicable extended deadline (i.e., 45 days after the original due date), the issuer or any person required to make any filings with respect to such an issuer 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.

Any issuer relying on the Order would not need to file a Notification of Late Filing on Form 12b-25 if the report, schedule, or form is filed within the time period prescribed by the Order.

Exemptive Relief Regarding Proxy Matters

Further, in the Order, the SEC exempted issuers that are subject to the proxy rules under the Exchange Act, and other persons making solicitations, from the requirements of the Exchange Act and the rules thereunder to furnish proxy statements, annual reports, and other soliciting materials, as applicable (the "Soliciting Materials"), and the requirements of the Exchange Act and the rules thereunder to furnish information statements and annual reports, as applicable (the "Information Materials"), where the conditions below are satisfied:

  • The issuer's 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 issuer or other person making the solicitation; and
  • The issuer or other person making a solicitation has made a good faith effort to furnish the Soliciting Materials to the security holder, as required by the rules applicable to the particular method of delivering Soliciting Materials to the security holder, or, in the case of Information Materials, the registrant has made a good faith effort to furnish the Information Materials to the security holder in accordance with the rules applicable to the Information Materials.

Discussion of the Guidance

Changing the Date, Time or Location of a Meeting

In the Guidance, the SEC acknowledged that many public companies that file and mail their proxy materials during the current proxy season may subsequently, as a result of the expanding impact of COVID-19, discover a need to change the date, time or location of an upcoming shareholder meeting or a need to switch to a virtual or hybrid meeting.

Recognizing these difficulties, the SEC announced that a company that has already mailed and filed its definitive proxy materials is permitted to notify its shareholders of a change in the date, time and location of its annual meeting without going through the expensive process of mailing its shareholders additional soliciting materials or amending its proxy materials if it:

  • issues a press release announcing the change;
  • files the announcement as definitive additional soliciting material on EDGAR; and
  • takes all reasonable steps necessary to inform other intermediaries in the proxy process (such as a proxy service provider) and other relevant market participants (such as a national securities exchange) of the change.

With respect to issuers who have not yet mailed and filed their definitive proxy materials, the SEC recommended that such issuers should consider their particular facts and circumstances and the reasonable likelihood of such a change, in determining whether to include disclosures surrounding the potential of date, time, or location changes of the annual meeting due to COVID-19.

Virtual Shareholder Meetings

In the Guidance, the SEC also stated issuers that have already filed and mailed their definitive proxy materials would not need to mail additional soliciting materials (including new proxy cards) for the purpose of switching from an in-person meeting to a "virtual" or "hybrid" meeting if they follow the same three-step process noted in "Changing the Date, Time and Location of a Meeting" section above. If a company makes this switch, it should notify its shareholders, intermediaries in the proxy process, and other market participants of its plans in a timely manner and disclose clear directions as to the logistical details of the "virtual" or "hybrid" meeting, including how shareholders can remotely access, participate in, and vote at the meeting.

A "virtual" shareholder meeting is a shareholder meeting that is conducted through the internet or other electronic means, and a "hybrid" meeting is an in-person meeting that also permits shareholder participation through electronic means.

Presentation of Shareholder Proposals

Although Exchange Act Rule 14a-8(h) requires shareholder proponents (or their representatives) to appear and present their proposals at the annual meeting, the SEC encouraged issuers to provide shareholder proponents (or their representatives) with the ability to present their proposals through alternative means, such as by phone, during the 2020 proxy season. To the extent a shareholder proponent (or representative) is not able to attend the meeting and present the proposal due to the inability to travel or other hardships related to COVID-19, the SEC would consider this to be "good cause" under the rule to the extent that an issuer seeks to exclude the proposal on this basis.


The unprecedented domestic and international situation regarding COVID-19, and its impact on all walks of life, is a rapidly evolving one. While the SEC actions described above were originally designed with companies that have a relationship with China in mind, we have quickly learned that none of us, including those in the United States, are beyond the reaches of COVID-19. Thus, as more schools, offices, and businesses in this country shut down, and as restrictions on gatherings and travel become more stringent, we expect that domestic issuers will begin to seek the relief provided by the SEC through the Order and the Guidance.

We will continue to monitor this global pandemic and the steps that are being taken by the SEC and related federal and state regulators in response to it.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.