SEC Staff Issues FAQs Pertaining to Its Order Extending Certain Filing Deadlines
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On May 4, 2020, the staff of the SEC's Division of Corporation Finance released four FAQs to address issues arising under its March 25, 2020 exemptive Order, which extended certain filing deadlines for companies impacted by COVID-19. The FAQs are described below.
Compliance with the Order
To take advantage of an extended filing deadline under the Order, a registrant must make the following prescribed disclosures in a Form 8-K (or Form 6-K, if applicable) filed no later than the original due date of the report, schedule or form (Form) to be filed on a delayed basis1 and in the Form when filed.
In the Form 8-K (or 6-K), the registrant must disclose: (1) that it is relying on the Order; (2) a brief description of the reasons why the registrant could not file the subject Form on a timely basis; (3) the estimated date by which it expects to file the Form; and (4) a company-specific risk factor(s) explaining the impact, if material, of COVID-19 on the registrant's business. If the reason for the delayed filing relates to the inability of any other person (e.g., an auditor) to furnish any required opinion, report or certification, the registrant must attach, as an exhibit to the Form 8-K or 6-K, 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 original due date of such report.
In the Form itself, the registrant or other filing person must disclose that it is relying on the Order and state the reasons why it could not file such Form on a timely basis.
Takedowns: A registrant may continue to conduct takedowns using an already-effective registration statement while relying on the Order for a periodic report (including a Form 10-K), if it determines that the prospectus used complies with Securities Act Section 10(a). Section 10(a)(3) requires that when a prospectus is used more than nine months after the effective date of the registration statement, the information contained therein shall be as of a date not more than sixteen months prior to such use, so far as such information is known to, or can be furnished by, the issuer without unreasonable effort or expense. In addition, shelf offerings pursuant to Securities Act Rule 415 require an undertaking to reflect in the prospectus any facts or events arising after the effective date of the registration statement which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Although Section 10(a)(3) may not prevent registrants relying on the Order from conducting a takedown using a prospectus that contains information older than sixteen months if updated information cannot be furnished without unreasonable effort or expense, registrants and their legal advisers will still need to determine whether they are otherwise required to update the prospectus. Registrants are responsible for the accuracy and completeness of their disclosure.
Reassessing Form Eligibility: Form 10-K Update: A registrant is required to reassess its Form S-3 eligibility when it files the Form 10-K that serves as a Section 10(a)(3) update. When a registrant with an effective Form S-3 registration statement properly relies on the Order to delay the filing of its Form 10-K, the registrant must reassess its eligibility when it actually files the Form 10-K. At the time of filing the Form 10-K, the registrant must meet all of the requirements of Form S-3 to remain eligible to use the form, including that it has filed all material required to be filed pursuant to Exchange Act Section 13, 14 or 15(d) for a period of at least twelve calendar months immediately preceding the Section 10(a)(3) update. The Form 10-K will be considered timely if all the conditions of the Order are met with respect to the filing. Registrants are encouraged to refer to the SEC's press release.
New Form S-3: A registrant may file a new Form S-3 between the original due date of a required filing and the due date as extended by the Order, even if the required filing has not yet been made. The staff will consider the registrant to be current and timely in its Exchange Act reporting for purposes of Form S-3 eligibility if the Form 8-K disclosing reliance on the Order is properly furnished (however, the staff will be unlikely to accelerate the effective date of a Form S-3 until information required to be included in the Form S-3 is filed). The registrant will no longer be considered current and timely (and will lose eligibility to file a new S-3), if it fails to file the required report by the due date as extended by the Order. Registrants with compelling and well-documented facts may contact the staff to discuss specific capital raising needs.
© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.