Public Agencies Should Immediately Review Continuing Disclosure Agreements for Any Publicly Offered Municipal Securities

Issuers of publicly offered municipal securities — including bonds, certificates of participation, notes and other forms of indebtedness — are required to disclose financial and operating information on an annual basis for as long as those securities are outstanding. Disclosures must adhere to the continuing disclosure undertaking prescribed in each continuing disclosure agreement, which also requires public agencies to disclose the occurrence of certain listed events pursuant to Securities and Exchange Commission Rule 15c2-12.

Spring is generally when issuers are obligated to file their annual report. Although the deadline to file and disclose an annual report varies between public agencies, and can even vary within an agency for each of its issuances, it is common for public agencies to promise to provide annual reports by March 31 or April 1 of each year. In practice, BB&K’s Public Finance Department is learning that most issuers comply with the deadlines and the content requirements of the continuing disclosure undertakings, however, there are many points of failure to file that seem minor at the time compliance is attempted, but result in additional disclosures related to such failures on future offerings.

With such an important deadline approaching, it is important to review the continuing disclosure agreement for each issuance of outstanding publicly offered municipal securities, to ensure timely and complete disclosures are made each year in connection with the required annual reports.

Below are some key tips to consider in this process:

• Verify completion: Too often, annual filings are filed with information missing or forgotten, such as information to be provided by a separate party. Documents should be reviewed closely to ensure that there are not blanks or holes.
• Note existing or potential changes: It is good practice for the issuer to provide a general statement regarding any general changes that have not risen to the level of a material event, but may be of interest to a bond owner, such as the change of management, change of a trustee or paying agent name, changes in operations as a result of COVID-19, or other general information.
• Ensure compliance: It is important to work with your municipal advisor, dissemination agent and disclosure counsel regarding continuing disclosure obligations and options to ensure compliance.

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