SEC PROVIDES CONDITIONAL RELIEF AND ASSISTANCE FOR COMPANIES AFFECTED BY THE CORONAVIRUS

Posted on: 4/2/20 by Kevin P. O'Leary, CPA

SEC PROVIDES CONDITIONAL RELIEF AND ASSISTANCE FOR COMPANIES AFFECTED BY THE CORONAVIRUS

March 2020

Filing Relief for Registrants Impacted by the Coronavirus

The SEC issued an exemptive order (the Order) on March 4, 2020 providing conditional relief for registrants that are impacted by the coronavirus (COVID-19) and are unable to file on a timely basis.  The Order provides companies with an extension of the due date of 45 days to file certain SEC disclosure reports that would have been due between March 1 and April 30, 2020. If a registrant intends to take advantage of this relief, the filing must disclose why it was unable to file on a timely basis. 
 
Additional steps must be taken to take advantage of the extension, including a requirement to furnish Form 8-K1 by the later of March 16, 2020 or the original reporting deadline, which includes the following information:
  1. A statement that the registrant is relying on the Order;
  2. A brief description of the reasons why the registrant cannot file on a timely basis;
  3. The estimated date the registrant expects to file;
  4. If appropriate, a risk factor explaining the impact of the coronavirus on the registrant’s business (if material); and
  5. If the reason the registrant is unable to file relates to a person other than the registrant, the Form 8-K must include an exhibit signed by that person containing the specific reasons why that person in unable to provide its opinion, report, certification, etc.
The due date for annual or quarterly reports for companies that receive an extension pursuant to the Order will be 45 days after the filing deadline for the report.  Those companies will be permitted to rely on the grace period in Exchange Act Rule 12b-25 to receive additional time to file the report (fifteen calendar days for an annual report and five calendar days for a quarterly report). Companies that take advantage of the extension permitted by the Order or the grace period permitted by Rule 12b-25 will still be considered current and timely Exchange Act filers for purposes of Form S-3 and Form S-8 eligibility.  
 
The Order also provides relief from the proxy and information statement delivery requirements for those delivering materials to the affected areas.
 
Further information can be found in the press release and exemptive order.  Registrants are encouraged to contact the SEC staff within the Division of Corporation Finance2 for any additional relief, assistance or other guidance. 
 

Disclosure Reminders for Registrants Impacted by the Coronavirus

The SEC’s press release announcing the Order also reminded all companies of their disclosure obligations under the federal securities laws:
  • If a company has become aware of a coronavirus related risk that would be material to its investors, it should refrain from engaging in securities transactions with the public.  Additionally, companies should take steps to prevent directors, officers, or other insiders from initiating such transactions until investors have been appropriately informed about the risk.
  • Companies should disseminate material information related to the impact of the coronavirus broadly and on a timely basis.  Previous disclosures may need to be revisited or updated. 
  • Companies providing forward-looking information or known trends and uncertainties regarding the coronavirus in an effort to keep investors informed can avail themselves of the safe harbor in Section 21E of the Exchange Act.

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