It’s not news that global financial markets are reeling from the effects of the coronavirus (COVID-19) pandemic.
To provide some relief, the SEC has issued an order that extends deadlines for publicly traded companies struggling to meet filing obligations required by federal securities laws. The relief also covers investment management firms.
“The impacts of the coronavirus may present challenges for certain companies that are required to provide information to trading markets, shareholders, and the SEC,” according to the regulator. “These companies may include U.S. companies located in the affected areas, as well as companies with operations in those regions.”
For publicly traded firms that must address compliance issues, the SEC is allowing them “an additional 45 days to file certain disclosure reports that would otherwise have been due between March 1 and April 30, 2020,” SEC officials say. “Among other conditions, companies must convey through a current report a summary of why the relief is needed in their particular circumstances.”
The SEC reports that it may “extend the time period for the relief, with any additional conditions it deems appropriate, or provide additional relief as circumstances warrant.”
In particular, the SEC staff has specified changes to obligations under the Securities Act and the Exchange Act for firms using Form S-3 and Form S-8, and those companies governed by Rule 144(c). The full details can be found here: http://bit.ly/32ROIE9
For investment managers, the SEC’s Division of Investment Management “understands that fund boards may have upcoming meetings that were planned, anticipating in-person attendance and that boards may be concerned about potential travel restrictions or the ability of directors to travel,” according to the SEC.
The division staff sent a letter to the Independent Directors Council last month that specifies that SEC staff “would not recommend enforcement action if fund boards do not adhere to certain in-person voting requirements in the event of unforeseen or emergency circumstances affecting some or all of the directors,” according to the SEC.
The SEC division is “extending the no-action position expressed in the Independent Directors Council letter with respect to unforeseen or emergency circumstances to cover all approvals and renewals (including material changes) of contracts, plans or arrangements under section 15(c) or rules 12b-1 or 15a-4(b)(2), as well as the selection of a fund’s independent public accountant pursuant to Section 32(a) where such accountant is not the same accountant as selected in the immediately preceding fiscal year.”
This relief applies to board meetings held between March 4 and June 15, 2020, and SEC might “extend the time period for this no-action position as circumstances warrant, with any additional conditions deemed appropriate.”
The SEC division wants investment advisers and funds to contact SEC staff about concerns they have related to the staff letter or to current or potential effects of COVID-19 on their operations. The number to call is +(202) 551-6825 while the correct email address is firstname.lastname@example.org .
In addition, as investment advisers and funds review the potential impacts of the pandemic, the SEC staff “encourages them to evaluate their business continuity plans and valuation procedures, among other relevant policies, procedures and systems.”
More information is available here: http://bit.ly/2TtOD6B
“The health and safety of all participants in our markets is of paramount importance. 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,” says Jay Clayton, chairman of the SEC in a prepared statement.
“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,” Clayton says.
“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,” Clayton adds.