On March 4, 2020, the Securities and Exchange Commission (“SEC”) issued a press release and an exemptive order (the “Order”)1 to address concerns among SEC registrants about the Coronavirus disease (“COVID‑19”). The primary focus of the Order was to provide an extension of the deadlines to file periodic and other reports with the SEC.
The filing relief applies to SEC reports that would otherwise be due between March 1 and April 30, 2020. Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and Preliminary and Definitive Proxy Statements are included within the scope of the Order. The Order allows registrants an additional 45 days to file such reports.
To qualify for the relief, a registrant must meet each of the following conditions:
- The registrant must be unable to timely file the report due to conditions caused by COVID-19;
- The registrant must file a Form 8-K (or a Form 6-K for foreign private issuers) by the later of March 16 or the original reporting deadline;
- The registrant must file the required report no later than 45 days after the original deadline; and
- In the filed report, the registrant must disclose that it relied upon the Order and the reasons for its inability to file by the original deadline.
The Form 8-K or Form 6-K referenced above must disclose that the registrant is relying on the Order and include the following additional disclosures:
- The reasons the registrant is unable to file timely the report;
- The estimated date by which the report 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 report cannot be filed timely relates to the inability of a third party to furnish an opinion, report or certification, an exhibit containing a statement signed by such third party stating the reasons for such inability.
As stated by the SEC in its press release accompanying the Order, registrants that were current in their reporting as of March 1, 2020 and that file their reports within the extended 45-day deadline in reliance on the Order will continue to be treated as current in their reporting for purposes of Rule 144 and the eligibility requirements for registration statements on Form S-3 and Form S-8. Furthermore, the SEC confirmed that registrants will be permitted to rely on Rule 12b-25, as applicable, if they are unable to file the required report(s) on or before the extended due date.
The Order also provides relief for registrants and other persons that are required to furnish proxy or information statements (and related materials) to security holders, subject to the following conditions:
- The security holder must have a mailing address where, due to COVID-19 concerns, common carriers have suspended delivery services of the type customarily used by the registrant or other person making the solicitation; and
- The registrant or other person must have made a good faith effort to furnish the materials to the security holder.
It is important to be aware that the Order does not provide relief from an insider’s obligation to file Section 16 reports or a shareholder’s obligation to file or amend a Schedule 13D.
In the press release accompanying the Order, the SEC reminded registrants and others to consider their activities in light of their disclosure obligations under the federal securities laws, including the need to:
- refrain from engaging in securities transactions where the registrant and/or insiders are aware of non-public information related to the impact of COVID-19 that would be material to investors;
- avoid selective disclosure of material nonpublic information about the impact of COVID-19 on the registrant; and
- consider whether to revisit, refresh or update previous disclosure regarding the impact of COVID-19 to the extent that the information becomes materially inaccurate.
Depending on the registrant’s circumstances, it may need to impose a trading blackout on its insiders.
Registrants that provide forward-looking information in an effort to keep investors informed about material developments, including known trends or uncertainties regarding COVID-19, can take steps to avail themselves of the safe harbor in Section 21E of the Exchange Act for this information. These steps include highlighting the forward-looking nature of the information and providing meaningful risk disclosure. Registrants should review their safe harbor language in light of the COVID-19 events.
Management of each registrant should remain mindful of its obligations to maintain effective disclosure controls and procedures, which would include a process to ensure that required disclosures about the risks of COVID-19 are timely and complete, and that all appropriate reports are filed within required timeframes, including the extended timeframes provided for in the Order.
1 The SEC’s press release may be found on its website here: https://www.sec.gov/news/press-release/2020-53. The SEC’s Order may be found on its website here https://www.sec.gov/rules/other/2020/34-88318.pdf. The Order was issued by the SEC pursuant to Section 36 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
This client alert is for information purposes only and should not be construed as legal advice.
This information in this client alert is not intended to create and will not constitute as a lawyer-client relationship.