SEC offers filing relief to companies affected by coronavirus
The Securities and Exchange Commission said Wednesday it is giving “conditional” regulatory relief from certain filing obligations for public companies under the federal securities laws due to the coronavirus.
The SEC acknowledged that the impacts of the coronavirus, also known as COVID-19, could pose challenges for certain companies that have to provide information to trading markets, shareholders and the SEC. Those companies could include U.S. companies located in the affected areas, along with companies that operate in those regions.
To address the potential issues, the SEC has issued an order that, subject to certain conditions, provides public companies with an extra 45 days to file certain disclosure reports that otherwise would have fallen due between March 1 and April 30, 2020. Among other conditions, companies need to convey through a current report a summary of why the relief is needed in their particular circumstances. The SEC may decide to extend the time period for the relief, with any extra conditions it thinks are appropriate, or offer more relief as circumstances warrant. Companies and their representatives can contact SEC staff if they have questions or matters of special concern.
"The health and safety of all participants in our markets is of paramount importance,” said SEC chairman Jay Clayton (pictured) in a statement. “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."
Last month, Clayton and other officials from the SEC and the Public Company Accounting Oversight Board issued a joint statement offering potential relief on filing and audit requirements to companies with operations in China (see our story). They also asked for disclosures about how coronavirus could be affecting them. On Wednesday, Clayton reiterated that point.
"We also remind all companies to provide investors with insight regarding their assessment of, and plans for addressing, material risks to their business and operations resulting from the coronavirus to the fullest extent practicable to keep investors and markets informed of material developments,” he added. “How companies plan and respond to the events as they unfold can be material to an investment decision, and I urge companies to work with their audit committees and auditors to ensure that their financial reporting, auditing and review processes are as robust as practicable in light of the circumstances in meeting the applicable requirements. Companies providing forward-looking information in an effort to keep investors informed about material developments, including known trends or uncertainties regarding coronavirus, can take steps to avail themselves of the safe harbor in Section 21E of the Exchange Act for forward-looking statements."
In a blog post last week, Marc Butler, of the securities compliance provider Intelligize, wrote about some of the disclosures that have been made by companies already. They include United Airlines and Delta Air Lines, which both disclosed that the outbreak caused them to suspend flights between the U.S. and China.
McDonalds and Starbucks have also made disclosures about the impact on their restaurants in China. “Fashion retailer Tapestry, which owns the Coach, Kate Spade and Stuart Weitzman brands, disclosed that it closed most of its stores on mainland China once the virus began spreading,” wrote Butler. He noted that all 700 IMAX theaters in mainland China have been closed since January. Las Vegas Sands Corp. said the Macao government suspended its casino operations there. Home appliance maker A. O. Smith Corp. and electronics manufacturer TTM Technologies Inc. have also needed to close factories in China.