United States: SEC Extends Conditional Relief Related To Coronavirus (COVID-19)

Today, in light of the continuing impact of COVID-19, the SEC issued an order extending the filing periods covered by its previous conditional reporting relief. The order provides public companies with a 45-day extension to file or furnish specified SEC filings that would otherwise have been due between March 1 and July 1, 2020. The order supersedes and extends the SEC's original order of March 4, 2020, which had applied to filings due between March 1 and April 30, 2020. As SEC Chair Jay Clayton observed, "[h]ealth and safety continue to be our first priority....These actions provide temporary, targeted relief to issuers, investment funds and investment advisers affected by COVID-19. At the same time, we encourage public companies to provide current and forward-looking information to their investors and, in these uncertain times, companies are reminded that they can take steps to avail themselves of the safe harbor in Section 21E of the Exchange Act for forward-looking statements." At the same time, the staff of Corp Fin issued Disclosure Guidance Topic No. 9, which offers the staff's views regarding disclosure considerations and other securities law obligations in the context of COVID-19 and related uncertainties (to be covered in a separate post). The SEC encourages companies to contact the SEC staff with questions or matters of particular concern, such as administrative issues related to inability to obtain a required signature due to a quarantine or other issues that may need to be addressed on a case-by-case basis.

Once again, in the press release, the SEC urged companies and insiders "to consider their activities in light of their disclosure obligations under the federal securities laws." For example, where the company has become aware of a material COVID-19-related risk, until the risk has been made public, the company should refrain from engaging in securities transactions with the public and take steps to discourage insiders from trading. If the company or insiders are already engaged in transactions, the company should consider disclosing the material information to inform the public of its financial condition and take steps to avoid selective disclosure. In addition, depending on a company's "particular circumstances, it should consider whether it may need to revisit, refresh, or update previous disclosure to the extent that the information becomes materially inaccurate."

For companies that rely on the order, the staff will take the following positions:

• For purposes of S-3, F-3 (or WKSI) eligibility, the company "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 Form S-8 eligibility and Rule 144(c) current public information requirements, the company "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 will be permitted to rely on Rule 12b-25 if they are unable to file the required reports on or before the extended 45-day due date available under the order.

The Order

The order provides a conditional exemption for filings due in the time period from March 1, 2020 to July 1, 2020.

More specifically, the order conditionally exempts companies (and persons) from the requirements to make filings (including "any amendment thereto") under Exchange Act "sections 13(a), 13(f), 13(g), 14(a), 14(c), 14(f), 15(d) and Regulations 13A, 13D-G (except for those provisions mandating the filing of Schedule 13D or amendments to Schedule 13D), 14A, 14C and 15D, and Exchange Act Rules 13f-1, and 14f-1."

To rely on the order, specific conditions must be satisfied:

• The company must be unable to file timely "due to circumstances related to COVID-19"
• The company must furnish to the SEC a Form 8-K or 6-K (described below) by the later of March 16 (obviously, date already passed) or the original filing deadline of the report
• The 8-K or 6-K must:
  • State that the company is relying on the order;
  • Provide "a brief description of the reasons why it could not file such report, schedule or form on a timely basis";
  • State the estimated date by which the report, schedule or form is expected to be filed;
  • Include, if material, one or more company-specific risk factors explaining, if material, the impact of COVID-19 on its business;
  • If the reason the report "cannot be filed timely relates to the inability of any person, other than the registrant, 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."
• The report, schedule or form must be filed no later than 45 days after the original due date.
• The report or other filing, when filed, must disclose that the company relied on the order and explain why the company could not file on a timely basis.

The order notes that, if a company relies on the order, it would not be required to file a Form 12b-25 so long as the report or other filing is filed within the time period prescribed above. It also notes that the SEC believes these statements, as furnished in the 8-K or 6-K, to the extent they contain "forward-looking statements" and otherwise meet the conditions of Exchange Act Section 21E, would be subject to the safe harbor.

The order also provides relief related to furnishing proxy soliciting materials to security holders "when mail delivery is not possible." More specifically, the order exempts a company (or person) from the Exchange Act requirements to furnish proxy statements, information statements, annual reports and other soliciting materials where the conditions below are satisfied:

• The 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 registrant or other person making the solicitation" and
• The company (or person) conducting the solicitation has made a "good faith effort" to furnish the soliciting or information materials to the security holder, as required by the applicable rules, including rules applicable to the particular method of delivery.

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