COVID-19: SEC Extends Conditional Exemptions from Reporting and Proxy Delivery Requirements
- For public companies affected by COVID-19, the U.S. Securities and Exchange Commission (SEC) has extended the filing periods covered by its previously enacted conditional reporting relief for certain Exchange Act filings due through July 1, 2020.
- It also exempted public companies and certain persons from furnishing proxy statements, information statements, annual reports, and other soliciting materials when mail delivery is not possible.
The U.S. Securities and Exchange Commission (SEC) issued an order (Order) on March 25, 2020, extending the filing periods for public companies and persons required to make any filings with respect to a public company that are affected by COVID-19, and exempting public companies and certain persons from furnishing proxy statements, information statements, annual reports and other soliciting materials (Proxy and Information Statement Materials).1 This Order supersedes the SEC's March 4, 2020, order that provided conditional reporting relief.2
Extended Filing Deadlines
If unable to meet a filing deadline due to circumstances related to COVID-19, the public company or person is provided with a 45-day extension to file certain Exchange Act of 1934 (Exchange Act) filings, such as quarterly and annual reports, beneficial ownership reports, proxy solicitations and information statements, that would otherwise have been due between March 1 and July 1, 2020, subject to the satisfaction of certain conditions described below.3 This extension will allow a public company with a Dec. 31 fiscal year end to delay filing its first quarter 2020 Form 10-Q report if necessary due to outbreak of COVID-19. The relief does not extend to Schedule 13D filings, amendments to Schedule 13D filings and Section 16 filings (e.g., Form 3 and Form 4).
Public companies affected by COVID-19 must furnish a Form 8-K or, if eligible, a Form 6-K, by the later of March 16 or the original filing deadline of the report for each filing that is delayed, which must:
- state that it is relying on the Order
- include a brief description of the reasons why it could not file such report, schedule or form on a timely basis
- state the estimated date by which the report, schedule or form is expected to be filed
- disclose a company specific risk factor or factors explaining the impact, if material, of COVID-19 on its business
If the reason the subject report cannot be filed timely relates to the inability of any person, other than the public company, to furnish any required opinion, report or certification, the Form 8-K or Form 6-K must include an exhibit with a statement signed by such person stating the specific reasons why such person is unable to furnish the required opinion, report, or certification on or before the date such report must be filed.4
In any report, schedule or form filed by the applicable 45-day extended deadline, the public company or person must disclose that it is relying on the Order and state the reasons why it could not file such report, schedule or form on a timely basis.5
If a public company meets the foregoing conditions and has filed the report by the extended deadline, it does not need to file a Notification of Late Filing on Form 12b-25.6 However, a public company will be permitted to rely on Rule 12b-25 if it is unable to file the required report on or before the extended deadline.7
Coverage of Amendments
The Order explicitly states that amendments required to be filed under the Exchange Act fall within the scope of the relief.8 This will be important where a public company omitted Part III information (e.g., information about directors, director independence, executive officers, executive compensation, corporate governance, principal stockholders, related person transactions, and audit fees and services) from its Form 10-K filing, relying on Form 10-K Instruction G.(3), which permits forward incorporation by reference from its proxy statement, but is now unable to file its definitive proxy statement within 120 days after its fiscal year-end due to COVID-19 outbreak circumstances. Normally, the public company would be required to file an amendment to Form 10-K if the definitive proxy statement is not filed within such 120-day period. However, the Order conditionally extends the deadline for filing such a Form 10-K amendment to add Part III information.
Proxy and Information Statement Materials Delivery Requirements Relief
The Order exempts public companies and certain persons from Exchange Act requirements to furnish Proxy and Information Statement Materials when mail delivery is not possible.9 However, this exemption applies only if: 1) the common carrier has suspended delivery service of the type or class customarily used by the public company or other person making the solicitation to the security holder's mailing address due to COVID-19, and 2) the public company or other person making the solicitation has made a good-faith effort to furnish the Proxy and Information Materials to the security holder in accordance with the applicable rules and regulations.10
The SEC intends to monitor the current situation and may, if necessary, extend the time period during which the relief applies, with any additional conditions it deems appropriate and/or issue other relief.11
As the COVID-19 situation continues to evolve, Holland & Knight's Public Companies and Securities Team will provide additional guidance for its clients.
DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the author of this alert for timely advice.
1 Order Under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions from the Reporting and Proxy Delivery Requirements for Public Companies, Release No. 34-88465, March 25, 2020.
7 SEC Extends Conditional Exemptions from Reporting and Proxy Delivery Requirements for Public Companies, Funds, and Investment Advisers Affected by Coronavirus Disease 2019 (COVID-19), March 25, 2020.
8 Order Under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions from the Reporting and Proxy Delivery Requirements for Public Companies, Release No. 34-88465, March 25, 2020.
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