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SEC Provides Conditional Relief from Filing Deadlines and Mailing Obligations as a Result of Coronavirus (COVID-19)

On March 4, 2020, the Securities and Exchange Commission (the “SEC”) issued an order granting conditional relief to certain issuers that provides an additional 45 days to file certain disclosure reports that would otherwise have been due between March 1, 2020 and April 30, 2020. Noting that disruptions to transportation and limited access to facilities, support staff, and professional advisors as a result of the coronavirus (“COVID-19”) could hamper the efforts of certain issuers and other persons to meet their filing deadlines, the SEC ordered that an issuer and any person required to make any filings with respect to such an issuer is exempt from any requirement to file or furnish certain materials with the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These include, but are not limited to, Form 10-K, Form 10-Q, Form 8-K, Form 20-F, and Schedule 13G (but not Schedule 13D or filings under Section 16 of the Exchange Act),[1] subject, in each case, to the following conditions:

  1. the issuer or any person required to make any filings with respect to such an issuer is unable to meet a filing deadline due to circumstances related to COVID-19;
  2. any issuer relying on the order furnishes to the SEC a Form 8-K or, if eligible, a Form 6-K, by the later of March 16, 2020 or the original filing deadline of the report stating:
     
    1. that it is relying on the order;
    2. a brief description of the reasons why it could not file such report, schedule, or form on a timely basis;
    3. the estimated date by which the report, schedule, or form is expected to be filed;
    4. if appropriate, a risk factor explaining, if material, the impact of COVID-19 on its business; and
    5. 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 deadline pursuant to item (c) above, 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.

In addition, the SEC noted that relief from complying with certain other requirements to furnish materials to security holders when mail delivery is not possible is warranted. As a result, the SEC also ordered that from March 1, 2020 through April 30, 2020 an issuer or any other person is exempt 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 following conditions are satisfied:

  1. 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
  2. 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 issuer has made a good faith effort to furnish the Information Materials to the security holder in accordance with the rules applicable to Information Materials.

SEC Chairman Jay Clayton reminded companies “to provide investors with insight regarding their assessment of, and plans for addressing, material risks to their business and operations resulting from the coronavirus to the fullest extent practicable to keep investors and markets informed of material developments. How companies plan and respond to the events as they unfold can be material to an investment decision, and [he] urge[s] companies to work with their audit committees and auditors to ensure that their financial reporting, auditing and review processes are as robust as practicable in light of the circumstances in meeting the applicable requirements.” The SEC also encouraged all companies and other related persons to consider their activities in light of their disclosure obligations under the federal securities laws, reminding companies that they should refrain from securities transactions with the public until material risks related to COVID-19 are disclosed, that they need to avoid selective disclosures, and that they may need to update previous disclosures if the previous disclosures become materially inaccurate.

In a press release that accompanied the order, the SEC indicated that it would take the following positions with respect to certain obligations under the Securities Act of 1933, as amended, and the Exchange Act with respect to the order:

  • For purposes of eligibility to use Form S-3 (and for well-known seasoned issuer status), a company relying on the 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 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.

The SEC also stated that it will address other issuer-related COVID-19 issues on a case-by-case basis in light of their fact-specific nature.

The March 4, 2020 order and press release follow the February 19, 2020 public statement by senior officials at the SEC and the Public Company Accounting Oversight Board (PCAOB) on the quality of the audit process in China and other emerging markets and the potential effects of COVID-19 on financial reporting.


Endnotes
1 The order specifically applies to any requirement to file or furnish materials with the SEC under Sections 13(a), 13(f), 13(g), 14(a), 14(c), 14(f), and 15(d) of the Exchange Act, Regulations 13A, Regulation 13D-G (except for those provisions mandating the filing of Schedule 13D or amendments to Schedule 13D), 14A, 14C and 15D, and Rules 13f-1 and 14f-1 under the Exchange Act, as applicable.

 

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Dan is a corporate and securities attorney whose practice spans the full gamut of corporate law. He has advised clients for nearly two decades in public and private equity and debt financings, securities law matters, mergers and acquisitions, and strategic advice on a broad range of other corporate matters. He capably counsels public and private companies with offerings, compliance, and securities questions and leads buyers and sellers throughout the transaction process. Dan represents life sciences companies as well as clients in other technology fields, financial services, and professional services firms.