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Securities and Exchange Commission Provides COVID-19 Relief

By Dave Thayer

The SEC recently issued orders (Release No. IA-5469 and Release No. 34-88318) providing conditional regulatory relief and assistance to reporting companies impacted by the COVID-19. If certain conditions are met, the order provides companies an additional 45 days to file certain Securities and Exchange Act of 1934 (the “Exchange Act”) reports otherwise due between March 1, 2020 and July 1, 2020.

Examples for Calendar Year-End Fiscal Year Companies

The following chart shows examples of certain SEC filings for each category of reporting company with original deadlines and revised deadlines with conditional COVID-19 relief.

Filer CategoryDocument TypeOriginal 2020 Deadline

COVID-19 Extended Deadline

Large Accelerated FilerForm 10-KMarch 2April 16
Accelerated FilerForm 10-KMarch 16April 30
Non-accelerated FilerForm 10-KMarch 30May 14
All U.S. FilersProxy StatementApril 29June 15

 

Note that the relief does not apply to Section 16 filers filing Forms 3, 4 or 5. In addition, based on an updated SEC order on March 25, 2020, it now appears that Quarterly Reports on Form 10-Q for the first quarter of 2020 will be eligible for extension.

Timing of Due Dates

The relief covers filings that are otherwise due from and including March 1, 2020 to July 1, 2020. However, the SEC has stated that it will monitor the situation and may extend the time period during which the relief applies.

Conditions for Relief

The relief that provides an additional 45 days to file certain Exchange Act reports otherwise due between March 1, 2020 and July 1, 2020 is subject to the following conditions:

    • • The reporting company or person required to make a filing is unable to meet the original filing deadline due to circumstances related to COVID-19.
    • • A reporting company relying on the relief furnishes a Form 8-K by the later of March 16 or the original filing deadline that includes:

-a statement that it is relying on the SEC’s order;
-a brief description of the reasons why it could not file the required report, schedule, or form on a timely basis;
-the estimated date it expects to file the report, schedule, or form;
-a risk factor, if appropriate, explaining any material impact of COVID-19 on its business (for sample risk factor disclosure related to COVID-19; and
-if the company’s report cannot be timely filed because of any other person’s inability to furnish a required opinion, report, or certification, the Form 8-K must have attached as an exhibit a statement signed by that person, stating why they are unable to furnish the required opinion, report, or certification before the original deadline.

    • •  The reporting company or person required to make a filing files its report, schedule or form within 45 days of the original filing deadline.
    • •  In the report, schedule, or form, the reporting company or person required to make a filing discloses it is relying on the SEC’s order and states the reasons why it could not file the report, schedule, or form on a timely basis.

 

Form 12b-25

The reporting company relying on the relief does not need to file a Form 12b-25 relating to the late filing if the report, schedule, or form is filed within the 45-day time period.

Proxy Statements and Information Statements

The SEC’s order further provides relief for reporting companies or other persons making solicitations from Exchange Act requirements to furnish proxy and information statements, annual reports and other soliciting materials to certain securityholders if the following conditions are satisfied:

    • •  the company’s security holder has a mailing address in an area where the common carrier has suspended delivery service of the type or class customarily used by the company has suspended deliveries due to COVID-19; and
    • •  the company or other person making a solicitation has made a good faith effort to furnish the soliciting materials or information statements to the securityholder, as required by the applicable rules.

 

Effect on Eligibility

In connection with the SEC’s order providing relief from reporting deadlines, the SEC staff has indicated that eligibility to use shelf registration statements, such as Form S-3 and Form S-8 (typically used to register shares underlying equity incentive plans) will not be adversely affected 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.

 

Annual Meeting

The SEC has also issued guidance regarding rescheduling annual meetings. Reporting companies can reschedule their meeting and the SEC has indicated procedures for doing so.

Reporting companies that have already mailed and filed their definitive proxy materials can notify shareholders of a change in date, time, or location of their annual meeting without mailing additional soliciting materials or amending their proxy materials if they:

    • •  issue a press release announcing the change;
    • •  file the announcement as definitive additional soliciting material on EDGAR (the SEC’s electronic reporting system); and
    • •  take all reasonable steps to inform other intermediaries in the proxy process (such as a proxy service provider) and other relevant market participants (such as the appropriate national securities exchanges) of the change.

 

Also, “virtual” or “hybrid” shareholder meetings are authorized in connection with COVIT-19. The company must notify shareholders, intermediaries in the proxy process, and other market participants of such plans in a timely manner and provide clear directions on how shareholders can remotely access, participate in, and vote at the virtual meeting.

With respect to reporting companies who have not filed their definitive proxy materials, the virtual meeting disclosures must be included in their definitive proxy statement and soliciting materials.

Other Disclosure Considerations

The SEC has also encouraged all companies and related persons to consider their activities in light of their disclosure obligations under federal securities laws, including:

    • • Rule 10b-5. If a company has become aware of a material risk related to COVID-19, avoid engaging in public securities transactions and take appropriate steps to prevent directors, officers, and other corporate insiders from engaging in transactions until investors are appropriately informed of the risk.
    • • Regulation FD. When making disclosures related to the impacts of COVID-19, take necessary steps to avoid selective disclosure and disseminate the information broadly. Depending on a company’s circumstances, it should consider whether it may need to revisit, refresh, or update previous disclosure to the extent that the information becomes materially inaccurate.
    • • Forward-looking Statements. If providing forward-looking statements to keep investors informed about material developments, including known trends or uncertainties regarding COVID-19, take steps to secure the protection of the safe harbor in Section 21E of the Exchange Act.

 

David A. Thayer, Esq., is a corporate and transaction attorney, and former CPA, that focuses on being a deal maker, not a deal breaker, as he helps clients achieve their business dreams. He can be reached at dthayer@joneskeller.com.


THIS INFORMATION IS NOT INTENDED AS LEGAL ADVICE. SEEK SPECIFIC LEGAL ADVICE BEFORE ACTING.

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