On May 4, 2020, the Division of Corporation Finance of the Securities and Exchange Commission (SEC) provided responses to frequently asked questions (FAQs) relating to the evolving circumstances arising from COVID-19. The FAQs address the disclosure requirements provided in the SEC’s Release No. 34-88465 (the “order”), released on March 25, 2020, and provide guidance regarding Form S-3 and shelf takedowns.
The SEC’s March 25, 2020 order allows public reporting companies to extend, by up to 45 days, the filing deadlines for reports, schedules, or forms required by the Securities Exchange Act of 1934, as amended (Exchange Act), that would be otherwise due from March 1 through July 1, 2020. The order supersedes the SEC’s March 4, 2020 order that covered filings otherwise due between March 1 and April 30, 2020. A company must meet the following conditions to take advantage of the extension:
- Be unable to meet the original filing deadline due to circumstances related to COVID-19.
- Be relying on the relief provided in the order.
- Furnish a Form 8-K (or Form 6-K) by the later of March 16 or the original filing deadline.
- File the applicable report, schedule, or form within 45 days of the original filing deadline.
Any registrant relying on this order would not need to file a Form 12b-25, typically filed to briefly extend Exchange Act filing deadlines, so long as the report, schedule, or form is filed as provided by the order.
The filing extension relief does not apply to Schedule 13D and Section 16 (including Forms 3, 4, and 5) disclosures. Because the conditions require that a company be unable to meet the original filing deadline, the filing extension relief is not intended to be optional relief for companies that are able to meet the original filing deadline.
The SEC’s new FAQs reiterate the disclosure obligations of reporting companies that rely on the order to delay filing. Specifically, with respect to the Form 8-K (or 6-K), companies are required to include the following disclosures:
- A statement that the company is relying on the order.
- A brief description of the reasons why the company could not file the subject report, schedule, or form on a timely basis.
- The estimated date by which the subject report, schedule, or form is expected to be filed.
- Company-specific risk factor(s) explaining the impact, if material, of COVID-19 on the business.
- If any of the reasons included relate to the inability of any person (other than the reporting company) to furnish any required opinion, report, or certification, the reporting company must file as an exhibit to the Form 8-K or 6-K a statement signed statement by that person stating the specific reasons why the required item could not be provided on a timely basis.
When finally filed, the report, schedule, or form that is filed on a delayed basis under the order should include a statement that the reporting company is relying on the order and the reasons why it could not file on a timely basis.
The SEC’s new FAQs also address Form S-3 and shelf takedowns. Specifically, the following topics are covered: takedowns using an already-effective registration statement while relying on the order for a delayed Exchange Act report, Form S-3 eligibility if the reporting company has relied on the order to delay filing a Form 10-K that is needed to update a registration statement in compliance with Section 10(a)(3)1 of the Securities Act of 1933, as amended (Securities Act), eligibility to file a new Form S-3 between the original due date of a filing and the due date as extended under the order, and acceleration of registration statements that do not contain all required information.
With respect to conducting takedowns, the FAQs clarify that while a company is relying on the order to extend the filing deadline of an Exchange Act report, the order does not delay or exempt compliance with the registration statement requirements under the Securities Act. The FAQs state that a reporting company may conduct takedowns using an already-effective registration statement while relying on the order to delay Exchange Act reports, so long as the prospectus included in the registration statement complies with Section 10(a)(3) of the Securities Act.
With respect to S-3 eligibility, the FAQs clarify that a company is required to reassess its Form S-3 eligibility on an already effective registration statement when it files a delayed Form 10-K needed to keep the registration statement compliant under Section 10(a)(3) of the Securities Act. To maintain S-3 eligibility, at the time the delayed 10-K is filed, the company must fulfill all requirements of Form S-3 (including Section 13, 14, or 15(d) filing requirements) for a period of at least 12 calendar months immediately preceding the Section 10(a)(3) update. Further, the delayed Form 10-K will be considered timely if all the conditions of the order are met with respect to the filing.
With respect to filing a new Form S-3 registration statement between the original due date of a required filing and the due date as extended by the order, a company relying on the order will be considered current in its Exchange Act reporting so long as it properly files the Form 8-K (or 6-K) disclosing reliance on the order. The FAQs also state that SEC Staff is unlikely to accelerate the effectiveness of a Form S-3 until all information required to be included in the Form S-3 is filed.
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1Section 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 in the prospectus must be no more than sixteen months old, so far as such information is known to the user of the prospectus or can be furnished without unreasonable effort or expense. Additionally, under Rule 415, shelf offerings require an undertaking to reflect in the prospectus any facts or events arising after the effective date of the registration statement that, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement.