SEC Provides Conditional Regulatory Relief and Assistance to Companies Affected by the Coronavirus Disease (COVID-19)
By Mohammed Asaduzzaman, Senior Manager, Assurance Services
The Securities and Exchange Commission (“SEC” or “Commission”) announced on March 4, 2020, that it is providing conditional regulatory relief from certain publicly traded company filing obligations under the federal securities laws.
To address potential compliance issues, the Commission issued an Order (Release No. 34-88318) that, subject to certain conditions, 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. Among other conditions, companies must submit a current report on Form 8-K that will include a written summary of why the relief is needed.
The original Order was superseded by Release No. 34-88465, on March 25, 2020, modifying the due dates on filings due on or before July 1, 2020; applicable conditions remain unchanged.
The relief covers all Exchange Act periodic and current reports (e.g. Form 10-K, 10-Q, 8-K, 20-F, 40-F, and 6-K) and all proxy and information statements.
The SEC divisions and offices will continue to closely track developments, and, if appropriate, consider additional relief from other regulatory requirements for companies affected by the coronavirus.
Entities and financial professionals affected by the coronavirus are encouraged to contact Commission staff with questions and concerns.
Companies intending to file a summary seeking relief under the Order, should be cognizant of the various conditions for application, including the requirement to furnish a Form 8-K or Form 6-K by the later of March 16 or the original reporting deadline. The Order will also impact certain other filings as mentioned below.
Commission staff will take the following positions with respect to certain obligations under the Securities Act and the Exchange Act:
- For purposes of eligibility to use Form S-3 (and for well-known seasoned issuer status, which is based in part on Form S-3 eligibility), a company relying on the exemptive order 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 the Form S-8 eligibility requirements and the current public information eligibility requirements of Rule 144(c), a company relying on the exemptive order 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 that receive an extension on filing Exchange Act annual reports or quarterly reports pursuant to the order will be considered to have a due date 45 days after the filing deadline for the report. As such, those companies will be permitted to rely on Rule 12b-25 if they are unable to file the required reports on or before the extended due date.
Disclosure Considerations for All Companies
The Commission encourages all companies and other related persons to consider their activities in light of their disclosure obligations under the federal securities laws. For example, where a company has become aware of a risk related to the coronavirus that would be material to its investors, it should refrain from engaging in securities transactions with the public and to take steps to prevent directors and officers (and other corporate insiders who are aware of these matters) from initiating such transactions until investors have been appropriately informed about the risk.
When companies do disclose material information related to the impacts of the coronavirus, they are reminded to take the necessary steps to avoid selective disclosures and to disseminate such information broadly. A company should consider whether it may need to revisit, refresh, or update previous disclosure to the extent that the information becomes materially inaccurate.
Companies providing forward-looking information in an effort to keep investors informed about material developments, including known trends or uncertainties regarding the coronavirus, can take steps to avail themselves of the safe harbor in Section 21E of the Exchange Act for this information.
Requests for Additional Assistance Relating to COVID-19
Some companies and other affected persons may require additional or different assistance in their efforts to comply with the requirements of the federal securities laws and, therefore, are encouraged to contact Commission staff. Registrants facing administrative difficulties in the filing process are encouraged to contact the staff available to help address these issues.
Coronavirus Resource Center
Have more questions about the impact of the coronavirus on your business? Visit Marcum’s Coronavirus Resource Center for up-to-date information.