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SEC Issues FAQs Providing Guidance on the Conditional Relief from Filing Deadlines as a Result of Coronavirus (COVID-19)

As discussed in our recent Viewpoints advisories on March 5, 2020 and on March 26, 2020, the Securities and Exchange Commission (the “SEC”) granted conditional relief to certain issuers that provides an additional 45 days to file certain disclosure reports due between March 1, 2020 and July 1, 2020 as a result of the coronavirus (“COVID-19”) pandemic (the “COVID-19 Order”). On May 4, 2020, the SEC’s Division of Corporation Finance issued FAQs to provide guidance to issuers regarding the COVID-19 Order. In addition to reminding issuers of the required disclosure obligations when an issuer relies on the COVID-19 Order, the FAQs address Form S-3 use and eligibility matters for issuers relying on the COVID-19 Order.

Takedowns from an Effective Form S-3

Under the FAQs, an issuer may continue to conduct takedowns using an already-effective Form S-3 while relying on the COVID-19 Order for a periodic report, including a Form 10-K, so long as it is in full compliance with the conditions of the COVID-19 Order and the prospectus used in the takedown complies with Section 10(a) of the Securities Act of 1933, as amended.[1]  The FAQs also remind issuers that shelf offerings pursuant to Rule 415 require an undertaking to reflect in the prospectus any facts or events arising after the effective date of the Form S-3 which, individually or in the aggregate, represent a fundamental change in the information set forth in the Form S-3 and issuers and their legal advisers need to determine when it is appropriate to update the prospectus.

Assessing Form S-3 Eligibility

Under the FAQs, an issuer that has relied on the COVID-19 Order to delay filing a Form 10-K that will serve as a Section 10(a)(3) update to the Form S-3 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 (the Form 10-K will be considered timely for purposes of the From S-3 eligibility assessment if all the conditions of the COVID-19 Order are met with respect to the filing of the Form 10-K).

New Forms S-3

Under the FAQs, an issuer relying on the COVID-19 Order to delay a required filing may file a new Form S-3 between the original due date of a required filing and the due date as extended by the COVID-19 Order. The FAQs advise issuers with compelling and well-documented facts that they may contact the SEC to discuss their specific capital raising needs, but the FAQs also note that the SEC will be unlikely to accelerate the effective date of a Form S-3 until such time as any information required to be included in the Form S-3 is filed.

The FAQs are in addition to the Compliance and Disclosure Interpretations (C&DIs) issued with respect to the COVID-19 Order discussed in our recent Viewpoints advisory on April 9, 2020

The SEC has stated that it will address other issuer-related COVID-19 issues on a case-by-case basis in light of their fact-specific nature. The SEC is also encouraging issuers that are unable to rely on the COVID-19 Order to contact the SEC to discuss collateral consequences of late filings.

Endnotes

1 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 the user of such prospectus or can be furnished by such user without unreasonable effort or expense.
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About this Author

Daniel T. Kajunski, Mintz Law firm, Corporate Attorney
Member

Dan is a corporate and securities attorney whose practice spans the full gamut of corporate law. He has advised clients for nearly two decades in public and private equity and debt financings, securities law matters, mergers and acquisitions, and strategic advice on a broad range of other corporate matters. He capably counsels public and private companies with offerings, compliance, and securities questions and leads buyers and sellers throughout the transaction process. Dan represents life sciences companies as well as clients in other technology fields, financial...

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