The SEC Division of Corporation Finance staff (the “Staff") has released a list of FAQs on COVID-19 for registrants (available here) that provides guidance on required disclosures under the SEC's COVID-19 Order and the application of such order to Form S-3 filings. The FAQs and responses provided by the Staff as of May 5, 2020 are summarized below—please follow the link above to read the full text of the FAQs.
COVID-19 Order Questions:
1. What disclosure is required under the COVID-19 Order (Release No. 34-88465 (March 25, 2020), available here)?
To take advantage of the extended filing deadline under the COVID-19 Order that provides conditional regulatory relief for certain filing obligations, a registrant must disclose on Form 8-K or Form 6-K (i) that it is relying on the COVID-19 Order; (ii) an explanation why the registrant could not file the form, schedule or report on a timely basis; (iii) the estimated date the form, schedule or report will be filed; and (iv) a company-specific risk factor or factors explaining the impact of COVID-19 on the registrant's business, if material. In circumstances in which the late filing is a result of an inability to obtain a required opinion, report or certification from a third party, such as the company's outside auditor, a statement from such third party is also required.
Form S-3 Questions:
1. May a registrant continue to conduct takedowns using an already-effective registration statement while relying on the COVID-19 Order for a periodic report, including a Form 10-K?
A registrant may continue to conduct takedowns if the prospectus complies with Section 10(a) of the Securities Act. The COVID-19 Order does not exempt or delay compliance with requirements under the Securities Act. Registrants will therefore need to consider the application of Section 10(a)(3) of the Securities Act, which requires that when a prospectus is used more than nine months after the effective date of a registration statement, the information therein shall be of a date not more than 16 months prior to such use, except to the extent such information cannot be furnished without unreasonable effort or expense. Registrants will also need to evaluate whether facts or events have arisen since the effective date of the registration statement that constitute a “fundamental change" requiring an update to the registration statement.
2. With respect to an effective Form S-3, when must a registrant reassess its eligibility to remain on the form if it has relied on the COVID-19 Order to delay filing a Form 10-K that will serve as a Section 10(a)(3) update?
When a registrant properly relies on the COVID-19 Order, the due date for filing the Form 10-K is extended, and the registrant must reassess its Form S-3 eligibility when it files the Form 10-K. The Form 10-K will be considered timely if all the conditions of the COVID-19 Order are met with respect to the filing. For more information, the SEC refers registrants to its press release on March 25, 2020, available here.
3. Is a registrant relying on the COVID-19 Order to delay a required filing eligible to file a new Form S-3 registration statement between the original due date of a filing and the extended due date, and will the staff accelerate the effectiveness of registration statements that do not contain all required information?
A registrant relying on the COVID-19 Order to delay a required filing may file a new Form S-3 registration statement even if the registrant has not filed a periodic report prior to the filing of the registration statement. The Staff will consider the registrant to be current and timely in its Exchange Act filings if the Form 8-K disclosing reliance on the COVID-19 Order is properly furnished, but the registrant will no longer be considered current and timely if it has not filed the required report by the due date as extended by the COVID-19 Order. While the Staff invites registrants with compelling and well-documented facts to contact the Staff to discuss their specific capital raising needs, it also notes that it is unlikely to accelerate the effective date of registration statements that do not contain all required information, suggesting that the Staff is unlikely to accelerate effectiveness of a registration statement prior to filing of a required report delayed in reliance on the COVID-19 Order
The FAQs are the views of the Staff, and the responses do not represent new SEC rules or regulations and are not statements of the SEC. Due to developing circumstances arising from COVID-19, the Staff may supplement or amend the FAQs. Please see here for a discussion related to other recent SEC developments regarding COVID-19 disclosures.
We would like to thank Rodrigo Surcan, David Sterngold and Jocelyn Shih in our New York office and Harrison Tucker in our Houston office for their work on this article.