SEC ProvidesConditional Regulatory Relief and Assistance for Companies Affected by theCoronavirus Disease 2019 (COVID-19)
SEC is closelymonitoring the impact of the coronavirus on investors and capital markets
FOR IMMEDIATE RELEASE
2020-53
Washington D.C.,March 4, 2020 —
Today, theSecurities and Exchange Commission announced that it is providing conditionalregulatory relief for certain publicly traded company filing obligations underthe federal securities laws. The impacts of the coronavirus may presentchallenges for certain companies that are required to provide information totrading markets, shareholders, and the SEC. These companies may includeU.S. companies located in the affected areas, as well as companies withoperations in those regions.
To address potential compliance issues,the Commission has issued an order that,subject to certain conditions, provides publicly traded companies with anadditional 45 days to file certain disclosure reports that would otherwise havebeen due between March 1 and April 30, 2020. Among other conditions,companies must convey through a current report a summary of why the relief isneeded in their particular circumstances. The Commission may extend thetime period for the relief, with any additional conditions it deemsappropriate, or provide additional relief as circumstances warrant. Companiesand their representatives are encouraged to contact SEC staff with questions ormatters of particular concern.
SEC Chairman JayClayton noted, “The health and safety of all participants in our marketsis of paramount importance. While timely public filing of Exchange Actreports is a cornerstone of well-functioning markets, we recognize that thissituation may prevent certain issuers from compiling these reports withinrequired timeframes.”
Chairman Claytonadded, “We also remind all companies to provide investors with insightregarding their assessment of, and plans for addressing, material risks totheir business and operations resulting from the coronavirus to the fullestextent practicable to keep investors and markets informed of material developments. Howcompanies plan and respond to the events as they unfold can be material to aninvestment decision, and I urge companies to work with their audit committeesand auditors to ensure that their financial reporting, auditing and reviewprocesses are as robust as practicable in light of the circumstances in meetingthe applicable requirements. Companies providing forward-lookinginformation in an effort to keep investors informed about materialdevelopments, including known trends or uncertainties regarding coronavirus,can take steps to avail themselves of the safe harbor in Section 21E of theExchange Act for forward-looking statements.”
In addition, the Division of InvestmentManagement has issued a staff statement regarding certain in-person boardvoting requirements under the Investment Company Act of 1940, available here.
The SEC divisionsand offices that oversee companies, accountants, investment advisers, mutual funds,brokerage firms, transfer agents, and other regulated entities and financialprofessionals will continue to closely track developments, and, if appropriate,consider additional relief from other regulatory requirements for thoseaffected by the coronavirus. Entities and financial professionals affectedby the coronavirus are encouraged to contact Commission staff with questionsand concerns.
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ADDITIONAL INFORMATION
Commission Order
The Commission hasenacted this Order having due regard for the needs and safety of companiesimpacted by COVID-19 while also considering the importance of markets andinvestors receiving materially accurate and timely information. For thosecompanies seeking to rely upon the Order, attention is directed to the variousconditions, including the requirement to furnish a Form 8-K or Form 6-K by thelater of March 16 or the original reporting deadline.
In connection withthe Commission relief issued in the order, the Commission staff will take thefollowing positions with respect to certain obligations under the SecuritiesAct and the Exchange Act:
· For purposes of eligibility to use FormS-3 (and for well-known seasoned issuer status, which is based in part on FormS-3 eligibility), a company relying on the exemptive order will be consideredcurrent and timely in its Exchange Act filing requirements if it was currentand timely as of the first day of the relief period and it files any report dueduring the relief period within 45 days of the filing deadline for the report.
· For purposes of the Form S-8 eligibilityrequirements and the current public information eligibility requirements ofRule 144(c), a company relying on the exemptive order will be consideredcurrent in its Exchange Act filing requirements if it was current as of thefirst day of the relief period and it files any report due during the reliefperiod within 45 days of the filing deadline for the report.
· Companies that receive an extension onfiling Exchange Act annual reports or quarterly reports pursuant to the orderwill be considered to have a due date 45 days after the filing deadline for thereport. As such, those companies will be permitted to rely on Rule12b-25 if they are unable to file the required reports on or before theextended due date.
Disclosure Considerations for All Companies
The Commissionencourages all companies and other related persons to consider their activitiesin light of their disclosure obligations under the federal securitieslaws. For example, where a company has become aware of a risk related tothe coronavirus that would be material to its investors, it should refrain fromengaging in securities transactions with the public and to take steps toprevent directors and officers (and other corporate insiders who are aware ofthese matters) from initiating such transactions until investors have beenappropriately informed about the risk.
When companies dodisclose material information related to the impacts of the coronavirus, theyare reminded to take the necessary steps to avoid selective disclosures and todisseminate such information broadly. Depending on a company’s particularcircumstances, it should consider whether it may need to revisit, refresh, orupdate previous disclosure to the extent that the information becomes materiallyinaccurate.
Companiesproviding forward-looking information in an effort to keep investors informedabout material developments, including known trends or uncertainties regardingthe coronavirus, can take steps to avail themselves of the safe harbor in Section21E of the Exchange Act for this information.
Requests for Additional Assistance Relatingto COVID-19
Some companies andother affected persons may require additional or different assistance in theirefforts to comply with the requirements of the federal securities laws andtherefore are encouraged to contact Commission staff. Registrants facingadministrative difficulties in the filing process (e.g., inability to obtain arequired signature due to an executive officer being located in a quarantinedzone) are encouraged to contact the staff who will be available to help addressthese issues. The Commission staff will address these and any issues on acase-by-case basis in light of their fact-specific nature.
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