SEC Extends Conditional Exemptions for Exchange Act Filings and Proxy Materials

Summary

On March 4, 2020, the SEC published an order providing conditional regulatory relief and assistance regarding filings under the Securities Exchange Act of 1934 (the “Exchange Act”) for issuers affected by COVID-19. This order was issued under the SEC’s exemptive authority in Exchange Act Section 36.[1] On March 25, 2020, the SEC published a follow-up order  (the “Order”), that supersedes the March 4, 2020 order, and extends the SEC’s conditional relief.[2]

The Order provides conditional relief for the late filing of specified Exchange Act filings that are due up to and including July 1, 2020, by providing an extension of the applicable filing due date for up to 45 days. This relief applies to public companies and other persons required to make filings for such companies that are “unable to meet a filing deadline due to circumstances related to COVID-19” and is subject to a number of conditions, including the furnishing of a Form 8-K or Form 6-K containing specified disclosures. The Order also provides conditional relief, with no time period specified for this relief, from the Exchange Act delivery requirements for proxy materials and information statement materials.

The SEC also stated that any public companies or other persons who have additional questions related to deadlines, delivery obligations, or their public filings, should contact the Division of Corporation Finance at (202) 551-3500 or at https://www.sec.gov/forms/corp_fin_interpretive.

This client alert discusses some of the details pertaining to the relief granted by the SEC in the Order.

SEC Relief Relating to Public Company Filings

Time Period for Relief

The SEC’s relief, which was granted with respect to public companies or other persons impacted by COVID-19, addresses filings due on or before July 1, 2020. The SEC continues to monitor the situation and will consider the need to extend the time period for the relief and the conditions that are applicable to that relief.

Conditional Relief Relating to Exchange Act Filing Requirements

The SEC granted relief from a number of filing requirements for public companies and other persons that are subject to those requirements. In granting this relief, the SEC reminded all persons who are operating under the relief that they must continue to evaluate their obligations to make materially accurate and complete disclosures in accordance with the federal securities laws.

The Order provides relief to any public company subject to the reporting requirements of Exchange Act Section 13(a) or 15(d) and any person required to make any filings with respect to such a company. The Order exempts companies and persons required to make filings with respect to such companies from any applicable requirement to file or furnish materials with the Commission under:

• Exchange Act Sections 13(a), 13(f), 13(g), 14(a), 14(c), 14(f), and 15(d);
• Regulations 13A, 13D-G (except for those provisions mandating the filing of Schedule 13D or amendments to Schedule 13D), 14A, 14C, and 15D; and
• Exchange Act Rules 13f-1 and 14f-1.

Importantly, the conditional exemptions granted by the SEC do not apply to filing requirements regarding the filing or amendment of Exchange Act Schedule 13D or the filing requirements under Exchange Act Section 16(a).

Conditions to the Relief from Exchange Act Filing Requirements

The SEC’s exemptions for Exchange Act filing requirements are subject to the following conditions:

• The company furnishes to the SEC a Form 8-K or, if eligible, a Form 6-K – for each filing that is delayed – by 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 such report, schedule, or form on a timely basis;
  • the estimated date by which the report, schedule, or form is expected to be filed;
  • a company-specific risk factor explaining, if material, the impact of COVID-19 on its business; and
  • if the reason the subject report cannot be filed timely relates to the inability of any person, other than the registrant, 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 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;
• The company or any person required to make any filings with respect to such company files with the SEC any report, schedule, or form required to be filed no later than 45 days after the original due date; and
• In any report, schedule, or form filed by the applicable deadline, the company or any person required to make any filings with respect to such company 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.

The SEC’s conditional relief includes significant guidance regarding its application. Most importantly, any registrant relying on the conditional relief would not need file a Form 12b-25 so long as the report, schedule, or form is filed within the time period prescribed by the Order. Further, with regard to the inability to timely file a report due to the inability of any person, other than the company, to furnish any required opinion, report, or certification, the SEC stated its belief that, to the extent any of the statements in the exhibit to the required, furnished Form 8-K or Form 6-K contain “forward-looking statements,” the furnished Form 8-K or Form 6-K would be subject to the Exchange Act Section 21E safe harbor for such statements.

In the press release announcing the extension of the relief, the SEC states that the SEC staff will deem a company relying on the relief to be current and timely with its SEC filings for Form S-3 eligibility purposes (and for meeting the definition of a well-known seasoned issuer), as long as the company was current and timely with its SEC filings as of the first day of the relief period and files any report due during the relief period within 45 days of the filing deadline for the report.[3] For purposes of Form S-8 eligibility and the current public information requirement in Rule 144(c), a company relying on the relief will be deemed current with its SEC reports if it was current as of the first day of the relief period and files any report due during the relief period within 45 days of the filing deadline for the report.

The SEC reiterated that companies relying on the relief when filing annual or quarterly reports have a due date 45 days after the filing deadline for the report; therefore, those companies can rely on Rule 12b-25 to obtain an additional extension of the filing deadline if they are unable to file by the extended due date.

Furnishing Proxy Soliciting Materials or Information Statement Materials

The SEC also granted conditional relief to registrants and other persons who are unable to comply with the requirements of the Exchange Act and the rules thereunder – specifically, Exchange Act Sections 14(a) and (c) and Regulations 14A and 14C and Exchange Act Rule 14f-1 – to furnish proxy soliciting materials or information statement materials to security holders. No time period is specified for this relief.

There are two conditions to the SEC’s relief:

• The security holder to whom the materials are required to be furnished has a mailing address located in an area where, as a result of COVID-19, the common carrier has suspended delivery service; and
• The person making a solicitation has made a good faith effort to furnish the proxy soliciting materials or information statement materials to the security holder.

No time period is specified for the conditional relief regarding the delivery of proxy soliciting materials or information statement materials.

Conclusion

The SEC’s order extending its relief for the timing of Exchange Act filings will be of great use to a wide range of companies and other filers. A key condition to that relief is that it is available only for persons who disclose that the relief is relied upon and provide a brief description of the reasons why it could not file a particular report, schedule, or form on a timely basis. In considering reliance on the SEC’s conditional relief, companies should consider their particular facts and circumstances and the ability to describe specifically the reasons arising from the COVID-19 pandemic that prevent the company from making a timely Exchange Act filing. Further, companies relying on the conditional relief will have to continue to consider appropriate means of providing any necessary, on-going disclosure to investors and market participants.

[1] Order Under Section 36 of the Securities Exchange Act of 1934 Granting Exemptions from Specified Provisions of the Exchange Act and Certain Rules Thereunder (Mar. 4, 2020), available at: https://www.sec.gov/rules/other/2020/34-88318.pdf.

[2] Order Under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions from the Reporting and Proxy Delivery Requirements for Public Companies (Mar. 25, 2020), available at: https://www.sec.gov/rules/exorders/2020/34-88465.pdf.

[3] 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), available at: https://www.sec.gov/news/press-release/2020-73.