On March 25, 2020, the Securities and Exchange Commission (the “SEC”) issued new orders extending the filing periods covered by its previously enacted conditional reporting relief for certain public company filing obligations under the federal securities laws, and also extended regulatory relief previously provided to funds and investment advisers whose operations may be affected by COVID-19.
Relief for Public Companies
The March 25th order (the “Order”) provides that, subject to certain conditions, public companies subject to the reporting requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, will have a 45-day extension to file certain disclosure reports (including annual reports and quarterly reports) that would otherwise have been due within the period from and including March 1, 2020 to July 1, 2020.
The conditions specified by the SEC include, but are not limited to, the company’s furnishing a Form 8-K (or a Form 6-K, if applicable) with the SEC by the original filing deadline of the report, stating, among other things, that it is relying on the Order and the reasons it could not file the report on a timely basis.
In connection with the relief issued in the Order, the staff of the SEC will take the following positions with respect to certain obligations under the Securities Act of 1933, as amended, and the Exchange Act:
• For purposes of eligibility to use Form S-3 (and for well-known seasoned issuer status), Form S-8 and Rule 144, a company relying on the Order will be considered current and timely in its filing requirements under the Exchange Act if it was current and timely as of the first day of the relief period and it files the required reports by the extended deadline.
• Companies that rely on the extension on filing annual reports or quarterly reports pursuant to the Order will be considered to have a due date 45 days after the filing deadline for the report. Those companies will be permitted to rely on Rule 12b-25 (which allows a 15-day extension for annual reports and a 5-day extension for quarterly reports) if they are unable to file the required reports on or before the extended deadline.
In addition, the Order provides relief for public companies seeking to comply with the requirements of Sections 14(a) and (c) of the Exchange Act and Regulation 14A, Regulation 14C and Rule 14f-1 promulgated thereunder to furnish proxy/information statements and other materials to shareholders when mail delivery is not possible due to COVID-19, if certain conditions are satisfied, including that the shareholder has a mailing address located in an area affected by COVID-19, in which the common carrier has suspended delivery service of the type or class customarily used.
Relief for Registered Investment Advisers
A new SEC order provides that RIAs affected by COVID-19 will have additional 45 days to fulfill their filing or delivery obligations, as applicable, under certain provisions of the Investment Advisers Act of 1940 (Advisers Act) that would otherwise have been due within the period from and including March 13, 2020 to June 30, 2020 (extended from April 30, 2020, as provided in the previous order).
Pursuant to the order:
• RIAs are exempt from the requirements under Rule 204-1 of the Advisers Act to file an amendment to Form ADV, and under Rule 204-3(b)(2) and (b)(4) of the Advisers Act to deliver Form ADV Part 2 (or a summary of material changes) to existing clients;
• Exempt reporting advisers are exempt from the requirements under Rule 204-4 of the Advisers Act to file reports on Form ADV; and
• RIAs are exempt from the requirements under Section 204(b) of and Rule 204(b)-1 of the Advisers Act to file Form PF.
RIAs wishing to rely on the order must promptly notify the SEC staff, and disclose on their websites or notify their clients (if in connection with the obligations under Rule 204-3(b)(2) and (b)(4)), that they are relying on such order. The new order removes the conditions set forth in the previous order that an RIA that intends to rely upon the relief must (i) explain in its correspondence to the SEC staff and on its website, as applicable, why it is unable to meet a filing or delivery deadline and (ii) provide an estimated date of completing the filing or delivery.
Other SEC Relief
On the same day, the SEC also issued another new order superseding and extending the relief provided under the Investment Company Act of 1940 by a previous order for registered management investment companies, closed-end investment companies, business development companies, and unit investment trusts that have been affected by the COVID-19 outbreak. Such order provides relief related to in-person board meetings as well as several filing requirements.
If necessary, the SEC may further extend the period for the above-mention reliefs, with any additional conditions it deems appropriate, or provide additional relief as circumstances warrant.
We know the new orders may be confusing and companies affected by COVID-19 are encouraged to consult with Sichenzia Ross Ference LLP so we can answer your questions in “plain English” and advise what actions should be taken.
Authored by Jay Kaplowitz, David Manno, Huan Lou and Devin Heck.
Gregory Sichenzia, Esq.
Marc J. Ross, Esq.
Michael H. Ference, Esq.
Thomas A. Rose, Esq.
James Turner, Esq
Jay Kaplowitz, Esq.
Darrin Ocasio, Esq.
Benjamin Tan, Esq.
David Manno, Esq.
Arthur Marcus, Esq
Avital Perlman, Esq
Jay Yamamoto, Esq
Barrett DiPaolo, Esq
Huan Lou, Esq.
Devin Heck, Esq.