Exchange Act Reports
On March 4, 2020, the Securities and Exchange Commission announced conditional regulatory relief to public companies impacted by coronavirus (COVID-19) granting them extra time to file or furnish materials due between March 1 and April 30, 2020. These companies will have an extra 45 days to file or furnish materials under the Exchange Act and associated regulations. This includes periodic reports such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, among others. The order can be found here.
As a condition to taking advantage of the filing extension, affected companies, who are unable to meet a filing deadline due to circumstances related to COVID-19, must make a filing on Form 8-K or 6-K explaining, among other things, (1) why the extra time is needed, (2) when the company expects to file the forms, and (3) if needed, a risk factor explaining the impact of the coronavirus on the company’s business. The explanatory filing must be made by March 16 or the original filing date of the affected report, which ever date is later.
SEC Chairman Jay Clayton noted, “The health and safety of all participants in our markets is of paramount importance. While timely public filing of Exchange Act reports is a cornerstone of well-functioning markets, we recognize that this situation may prevent certain issuers from compiling these reports within required timeframes.”
Annual Reports, Proxy Statements and Other Soliciting Materials
The SEC order also exempts companies from the obligation to deliver required proxy statements, annual reports and other soliciting materials to security holders if (1) the security holder has a mailing address in an area where, as a result of coronavirus, the customary delivery service used by the company has been suspended, and (2) the company or other person making a solicitation has made a good-faith effort to furnish materials to the security holder.
Disclosure Considerations for All Companies
The SEC has also recently advised all companies “to consider their activities in light of their disclosure obligations under the federal securities laws.” Hundreds of public companies have added new coronavirus risk factors or added language about the outbreak to existing risk factors. The Commission also reminds those making coronavirus disclosures “to take the necessary steps to avoid selective disclosures and to disseminate such information broadly. 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.” Orrick can advise companies considering new language or about steps that might be considered in revising or updating existing disclosures.
Caution Against Insider Activity
The SEC has further cautioned against insider use of coronavirus-related information: “where a company has become aware of a risk related to the coronavirus that would be material to its investors, it should refrain from engaging in securities transactions with the public and to take steps to prevent directors and officers (and other corporate insiders who are aware of these matters) from initiating such transactions until investors have been appropriately informed about the risk.”
