SEC Eases Deadlines for Public Companies Due to Pandemic

March 16, 2020Alerts

The U.S. Securities and Exchange Commission is giving some publicly traded companies an additional 45 days to file disclosure reports due between March 1 and April 30, 2020. However, this extra time is contingent on the company’s providing reasons for needing the relief.

The SEC said it recognized that the coronavirus pandemic has made it difficult for some companies – either located or having operations in affected areas – to provide the required information necessary to satisfy their reporting obligations.

The SEC also stated it would consider additional relief if warranted and is encouraging companies to reach out to agency staff to have a dialogue about specific concerns. The SEC also sought to have companies ensure that their disclosures remain current by coordinating with their audit committees and outside auditors to ensure that companies meet their requirements under the Securities Act of 1933 and Securities Exchange Act of 1934 as well as relying upon the safe harbor in Section 21E of the Exchange Act for forward-looking statements.

Additionally, the SEC urged others it regulates – accountants, investment advisers, mutual funds, brokerage firms, transfer agents, and other regulated entities and financial professionals – to contact staff with concerns or questions.

The SEC also encouraged companies to consider their disclosure activities and to be aware of the materiality of coronavirus risks to investors. In particular, it discouraged companies from engaging in securities transactions with investors unless appropriate risk disclosures have been made. Further, the SEC cautioned that a company’s directors, officers, and other corporate insiders should refrain from securities transactions unless investors have been informed of the risks.

Material information regarding coronavirus effects must be disclosed and should be broadcast in the widest fashion, not selectively disclosed. Companies should also review their outstanding disclosures to ensure that the information does not need to be updated. If it is stale, the SEC suggests that the disclosure should be reviewed and revised accordingly so that it is not materially inaccurate. Again, the SEC urges companies to consider the safe harbor in Section 21E of the Exchange Act.

Finally, the SEC reiterated its guidance that it is open to considering additional and other forms of assistance to ensure a company’s compliance with the federal securities laws. All that is required is for the company and its representatives to reach out to the Staff so as to discuss these matters and consider “workarounds” for the specific problems.

Fox Rothschild’s Securities Industry attorneys remain ready to assist companies in navigating these issues with the SEC to ensure compliance with the federal securities laws and avoiding any regulatory action by the SEC.