To address potential compliance issues, the SEC issued an order that, subject to certain conditions, provides public companies with a 45-day extension to file certain disclosure reports.
On March 25, 2020, the Securities and Exchange Commission announced that it is extending the filing periods covered by its previously enacted conditional reporting relief for certain public company filing obligations under the federal securities laws, and that it is also extending regulatory relief previously provided to funds and investment advisers whose operations may be affected by COVID-19. In addition, the SEC’s Division of Corporation Finance issued its current views regarding disclosure considerations and other securities law matters related to COVID-19.
Filing Deadline Relief for Public Companies
To address potential compliance issues, the SEC issued an order that, subject to certain conditions, provides public companies with a 45-day extension to file certain disclosure reports that would otherwise have been due between March 1 and July 1, 2020. This order supersedes and extends the SEC’s prior order of March 4, 2020. Among other conditions, companies must continue to convey through a current report (Form 8-K) a summary of why the relief is needed in their particular circumstances for each periodic report that is delayed. The SEC may provide extensions to the time period for the relief, with any additional conditions it deems appropriate, or provide additional relief as circumstances warrant. The SEC encouraged companies and their representatives to contact SEC staff with questions or matters of particular concern.
Relief for Funds and Investment Advisers
The SEC also issued two orders, IA-5469 and IC-33824, that provide certain investment funds and investment advisers with additional time for holding in-person board meetings and meeting certain filing and delivery requirements, as applicable. These orders supersede and extend the filing periods covered by the SEC’s prior orders of March 13, 2020. Among other conditions, entities must notify the SEC and/or investors, as applicable, of the intent to rely on the relief, but generally no longer need to describe why they are relying on the order or estimate a date by which the required action will occur.
Disclosure Guidance for Public Companies
Further, the Division of Corporation Finance issued Disclosure Guidance Topic No. 9, providing the staff’s current views regarding disclosure and other securities law obligations that companies should consider with respect to COVID-19 and related business and market disruptions. The Division has been monitoring how companies are reporting the effects and risks of COVID-19 on their businesses, financial condition and results of operations and is providing the guidance as companies prepare disclosure documents during this uncertain time. In the guidance, the Division reminds companies that a number of existing rules or regulations require disclosure about the known or reasonably likely effects of and the types of risks presented by COVID-19. As a result, disclosure of these risks and COVID-19-related effects may be necessary or appropriate in management’s discussion and analysis, the business section, risk factors, legal proceedings, disclosure controls and procedures, internal control over financial reporting and the financial statements. The guidance also poses a series of questions designed to help companies assess COVID-19-related effects and consider their disclosure obligations including:
- How has COVID-19 impacted your financial condition and results of operations?
- In light of changing trends and the overall economic outlook, how do you expect COVID-19 to impact your future operating results and near-and-long-term financial condition?
- Do you expect that COVID-19 will impact future operations differently than how it affected the current period?
The guidance asks that companies and related persons be mindful of their market activities, including the issuance or purchase of securities, in light of their obligations under the federal securities laws. For example, where COVID-19 has affected a company in a way that would be material to investors or where a company has become aware of a risk related to COVID-19 that would be material to investors, the company, its directors, officers and other corporate insiders who are aware of these matters should refrain from trading in the company’s securities until such information is disclosed to the public. The guidance also reminds companies of their obligations under Regulation FD to avoid selective disclosures.
About Duane Morris
The Duane Morris COVID-19 Strategy Team is advising organizations on all aspects of the legal implications of COVID-19 including contractual, employment, insurance and healthcare issues. Contact your Duane Morris attorney for more information. Prior Alerts on the topic are available on the team’s webpage.
For More Information
If you have any questions about this Alert, please contact Darrick M. Mix, any of the attorneys in our Capital Markets Group, any of the attorneys in our Corporate Practice Group, any member of the COVID-19 Strategy Team or the attorney in the firm with whom you are in regular contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.