SEC Staff Provides Views on Disclosure and Other Securities Law Obligations in Consideration of Covid-19

The SEC has issued the following guidance for consideration of COVID-19 (Coronavirus):

  • CF Disclosure Guidance Topic 9: Coronavirus (COVID-19);
  • Staff Statement Regarding Rule 302(b) of Regulation S-T in Light of COVID-19 Concerns; and
  • Extension of Conditional Relief Exemptions From Reporting and Proxy Delivery Requirements for Public Companies, Funds, and Investment Advisers.

CF Disclosure Guidance Topic 9: Coronavirus (COVID-19)

The staff in the SEC’s Division of Corporation Finance (Corp Fin) has issued this guidance to provide current views regarding disclosure considerations and other securities law matters related to COVID-19. CF Disclosure Topic 9 provides guidance on these broad topics:

  • Assessing and Disclosing the Evolving Impact of COVID-19;
  • Need to Refrain from Trading Prior to Dissemination of Material Non-Public Information; and
  • Reporting Earnings and Financial Results.

Corp Fin “has been monitoring how companies are reporting the effects and risks of COVID-19 on their businesses, financial condition, and results of operations and is providing the guidance as companies prepare disclosure documents during this uncertain time.” The guidance encourages timely reporting while recognizing that it may be difficult to assess or predict with precision the broad effects of COVID-19 on industries or individual companies.

As events evolve, Corp Fin has indicated that it will provide additional guidance, if appropriate. Companies and their representatives are encouraged to contact Corp Fin with questions or if they believe there are additional areas where guidance or temporary relief may be necessary.

Staff Statement Regarding Rule 302(b) of Regulation S-T in Light of COVID-19 Concerns 

The SEC staff published a statement in response to inquiries from persons and entities subject to Regulation S-T regarding the authentication document retention requirements under Rule 302(b) in light of health, transportation, and other logistical issues raised by the spread of COVID-19. Given the public health and safety concerns related to COVID-19, the SEC staff published the statement to those affected by COVID-19 regarding Rule 302(b) of Regulation S-T.

Rule 302(b) of Regulation S-T requires that each signatory to documents electronically filed with the SEC under the federal securities laws “manually sign a signature page or other document authenticating, acknowledging or otherwise adopting his or her signature that appears in typed form within the electronic filing.”  Such documents must be executed before or at the time the electronic filing is made. Further, electronic filers must retain such documents for a period of five years and furnish copies to the SEC or its staff upon request.

The SEC staff expects all persons and entities subject to Regulation S-T to “comply with the requirements of Rule 302(b) to the fullest extent practicable based on their particular facts and circumstances. However, the staff understands that some persons and entities subject to Regulation S-T may experience difficulties satisfying these requirements due to circumstances arising from COVID-19.” In light of these difficulties, the SEC staff will not recommend the SEC take enforcement action with respect to the requirements of Rule 302(b) if:

  • A signatory retains a manually signed signature page or other document authenticating, acknowledging, or otherwise adopting his or her signature that appears in typed form within the electronic filing and provides such document, as promptly as reasonably practicable, to the filer for retention in the ordinary course pursuant to Rule 302(b);
  • Such document indicates the date and time when the signature was executed; and
  • The filer establishes and maintains policies and procedures governing this process.

The signatory may also provide to the filer an electronic record (such as a photograph or pdf) of such document when it is signed. 

Extension of Conditional Relief Exemptions From Reporting and Proxy Delivery Requirements for Public Companies, Funds, and Investment Advisers

The SEC also announced that it is extending the filing periods covered by its previously enacted conditional reporting relief for certain public company filing obligations under the federal securities laws, and that it is also extending regulatory relief previously provided to funds and investment advisers whose operations may be affected by COVID-19.

To address potential compliance issues, the SEC previously issued an order that, subject to certain conditions, provides public companies with a 45-day extension to file certain disclosure reports that would otherwise have been due between March 1, 2020 and July 1, 2020.  Today’s Order supersedes and extends the SEC’s Original Order of March 4, 2020.  Among other conditions, the SEC indicated that “companies must continue to convey through a current report a summary of why the relief is needed in their particular circumstances for each periodic report that is delayed. The Commission may provide extensions to the time period for the relief, with any additional conditions it deems appropriate, or provide additional relief as circumstances warrant.” Companies and their representatives are encouraged to contact SEC staff with questions or matters of particular concern.

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