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How the SEC is responding to COVID-19

 

How the SEC is responding to COVID-19

Mar 18, 2020

On March 4, 2020 the SEC issued an exemptive order that will provide “conditional regulatory relief” for certain company filing obligations under the federal securities laws. This order will grant all SEC-registered entities an additional 45 days to file certain disclosure reports that would otherwise have been due between March 1, 2020 and April 30, 2020, given they meet certain requirements.

The order was released as the SEC acknowledged its understanding that the far-reaching implications of COVID-19 “may present challenges for certain companies that are required to provide information to trading markets, shareholders, and the SEC. These companies may include U.S. companies located in the affected areas, as well as companies with operations in those regions.”

To qualify for relief, companies must provide the SEC with:

  • A current report on Form 8-K (or, if eligible, a Form 6-K) by the report’s deadline with a statement that the company is relying on the SEC’s order
  • A description of why the company could not file its required material on a timely basis
  • An estimate of when the late material will be filed
  • If appropriate, a risk factor explaining the impact of COVID-19 on the company’s business

Additionally, in the event that a company’s filing is late due to the failure of a third party to furnish an opinion, the company’s current report must attach an exhibit signed by the third party stating the specific reasons why the required opinion, report or certification could not be furnished.

Public companies, in particular, should continue to monitor the developments related to the impact of COVID-19 and the need to take further action. It’s also important to keep in mind that if, or when, a company does “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,” the SEC stated. Depending on the situation at hand, it may also make sense to revisit previous disclosures to the extent that the information becomes materially inaccurate.

With the fluid nature of this situation, we know that things will likely continue to evolve and change. The commission may extend the time period for the relief, with any additional conditions it deems appropriate, or provide additional relief as circumstances warrant. Companies and their representatives are encouraged to contact SEC staff with questions or matters of particular concern. Should you have specific questions on how to file for relief or how this could impact your business, please do not hesitate to reach out – we’re here to help you navigate through this uncertain time.

Author(s)

Sonny MacArthur
Sonny MacArthur, CPA, CIA
Partner
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