COVID-19 SEC Filing Relief and Disclosure Guidance

March 27, 2020

Public companies stressing over how to meet filing deadlines during the COVID-19 crisis and what to say about the pandemic’s impact just received a filing reprieve and disclosure guidance from the SEC. The Securities and Exchange Commission issued an order on March 25, 2020 conditionally extending the deadlines for certain public company filings under the federal securities laws. On the same day, the staff of the SEC’s Division of Corporation Finance issued guidance on disclosure considerations and other securities law matters related to COVID-19.

Filing Extensions

Subject to certain conditions summarized below, SEC filers will have a 45-day extension to file certain disclosure reports that would otherwise have been due between March 1 and July 1, 2020. For example, a smaller reporting company with a normal filing deadline of March 30, 2020 for its Annual Report on Form 10-K will now have an extended deadline of May 14, 2020.

To qualify for the filing extension under the order, a filer must (i) be unable to meet a filing deadline due to circumstances related to COVID-19 and (ii) file a Current Report on Form 8-K (or Form 6-K) for each delayed filing by the later of March 16, 2020 or the original filing deadline of the report stating:

that it is relying on the order;
a brief description of the reasons why it could not file the report, schedule or form on a timely basis;
the estimated date by which the report, schedule, or form is expected to be filed; and
company-specific risk factors explaining the impact, if material, of COVID-19 on its business, which may be subject to the protections of the statutory safe harbor for forward-looking statements.

If the reason the report cannot be filed timely relates to the inability of any person, other than the company, to furnish any required opinion, report or certification, the Form 8-K (or Form 6-K) must attach as an exhibit a statement signed by that person stating the specific reasons why that person is unable to furnish the required opinion, report or certification on or before the date the report must be filed.

A registrant relying on the order would not need to file a Form 12b-25 so long as the report, schedule or form is filed within the time period prescribed by the order. The SEC order does not apply to Schedule 13D filings or amendments to a previously-filed Schedule 13D. Finally, the SEC order also does not apply to Section 16 beneficial ownership reports on Forms 3, 4 and 5.

COVID-19 Disclosure Guidance

Also on March 25, 2020, the staff of the SEC’s Division of Corporation Finance staff provided guidance on disclosure and other securities law obligations relating to COVID-19. The guidance provides a series of factors for companies to consider when drafting COVID-19 disclosure, including the following:

COVID-19’s impact on financial condition and results of operations, future operating results and near-and-long-term financial condition.
COVID-19’s impact on capital and financial resources, including overall liquidity position and outlook, cost of or access to capital and funding sources.
Material uncertainty about ongoing ability to meet credit agreements covenants because of the impact.
Course of action taken or proposed to be taken to remedy any material liquidity deficiency.
COVID-19’s effect on the company’s balance sheet and the company’s ability to account timely for those assets.
Anticipation for any material impairments (e.g., with respect to goodwill, intangible assets, long-lived assets, right of use assets, investment securities), increases in allowances for credit losses, restructuring charges, other expenses, or changes in accounting judgments that have had or are reasonably likely to have a material impact on the financial statements.
Adverse impact of any COVID-19-related circumstances such as remote work arrangements on the company’s ability to maintain operations, including financial reporting systems, internal control over financial reporting and disclosure controls and procedures.
Any expectation that COVID-19 will materially affect the demand for the company’s products or services.
Whether the company anticipates a material adverse impact of COVID-19 on supply chain or methods used to distribute products or services.
Whether operations will be materially impacted by any constraints or other impacts on human capital resources and productivity.
Whether travel restrictions and border closures are expected to have a material impact on ability to operate and achieve business goals.

The guidance also confirmed the need for companies and insiders to refrain from trading in the company’s securities prior to dissemination of material non-public information. For example, where COVID-19 has affected a company in a way that would be material to investors or where a company has become aware of a risk related to COVID-19 that would be material to investors, the company, its directors and officers, and other corporate insiders who are aware of these matters should refrain from trading in the company’s securities until such information is disclosed to the public.