Tuesday, March 31, 2020

New C&DIs clarify application of COVID-19 order to late filing notices

By John M. Jascob, J.D., LL.M.

The staff of the SEC’s Division of Corporation Finance has issued two new Compliance & Disclosure Interpretations (C&DIs) that address questions involving the inability of reporting companies to timely file certain reports due to the COVID-19 pandemic. Specifically, the new C&DIs address the interplay of the Commission’s recent COVID-19 order and the filings that would otherwise be required under Exchange Act Rule 12b-25 from issuers who are unable to timely file certain reports with the SEC.

Rule 12b-25(a) requires registrants who have failed to timely file Form 10-K (or Forms 10-Q, 20-F, 11-K, N-CSR or N-CEN) to file, within one business day after the due date, a Form 12b-25 disclosing the registrant's inability to file the report and the reasons why this occurred. Rule 12b-25(d) prohibits registrants from using any Securities Act registration statement that is predicated on timely filed reports until the delayed report has been actually filed.

New Question 135.12 concerns the case where a registrant expects due to COVID-19 that it: (1) will be unable to timely file a report covered by Rule 12b-25 without unreasonable effort or expense; and (2) may not be able to file the report within the period specified under Rule 12b-25(b)(2)(ii). The response states that in this case, the registration should instead file a report on Form 8-K or 6-K, as applicable, relying on the COVID-19 order. If the registrant only files a Form 12b-25 by the report’s original due date, the registrant will have not met the condition of the COVID-19 order. Consequently, the 45-day relief period provided in the order will not be available.

New Question 135.13 asks whether a registrant that has already filed a Form 12b-25 can subsequently rely on the COVID-19 order to avail itself of the order’s 45-day filing extension. The C&DI answers “yes,” but notes that the registrant must also fulfill the requirements upon which the relief is conditioned. Under the order, registrants must furnish certain specified statements on Form 8-K or Form 6-K by the later of March 16, 2020, or the original due date of the required report. Unless this condition is met, the 45-day relief period will not be available.

Each of the new C&DIs state that registrants that are unable to rely on the COVID-19 order are encouraged to contact the Division staff to discuss collateral consequences of late filings.