May 25, 2020

SEC Provides Informal Guidance on COVID-19 Relief Regarding Incorporation by Reference of Information from Proxy Materials into Form 10-K

On March 25, the U.S. Securities and Exchange Commission (SEC) granted public company regulatory relief and issued Staff guidance regarding disclosure obligations in light of the continued complications associated with the COVID-19 pandemic (which we wrote about here). The pandemic has had deleterious effects on markets, companies, and individuals tasked with regulatory compliance and corporate governance. This order and guidance is a continuation of SEC Chairman Jay Clayton’s statement from January that the SEC Staff would monitor and provide guidance to issuers and other market participants regarding disclosures related to the effects of COVID-19.

Incorporation by Reference of Information into Form 10-K Filed During Extended Filing Period

The SEC initially announced its conditional regulatory relief on March 5, when it issued an order that provided publicly traded companies (registrants) with an additional 45 days to file disclosure reports that would otherwise have been due between March 1 and April 30, 2020. On March 25, the SEC issued a new Order, which modified the exemptions to cover filings due on or before July 1, 2020.

Technically, the Order did not modify the requirement in Form 10-K that allows an issuer to incorporate Part III information from definitive proxy materials into an annual report on Form 10-K provided that the proxy materials are filed within 120 days following the end of the fiscal year.  The Office of Chief Counsel of the SEC has notified Schiff Hardin that the Staff is taking the interpretative position that the 120-day requirement is a regulatory filing deadline for purposes of the SEC Order, and therefore an issuer may extend that period by filing an 8-K contemplated by the Order that seeks an extension of time to file the materials of up to 45 days (or 165 days following the close of the fiscal year).  Thus a fiscal year-end filer could obtain a 45-day extension to file its 10-K by filing an 8-K contemplated by the Order, and then could extend the time of filing its definitive proxy statement for up to 165 days after the close of the fiscal year by filing an 8-K contemplated by the Order, and incorporate by reference Part III information into its 10-K from those proxy materials.

© 2020 Schiff Hardin LLP

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Partner

For more than 30 years, Ralph V. De Martino has devoted his practice to the representation of public and private companies, the officers and directors who serve them, and financial institutions, broker-dealers and associated members. Mr. De Martino is distinguished among his peers in matters involving public and private company capital formation, securities offerings, regulatory inquiries and enforcement proceedings, internal investigations, and corporate finance and governance matters. He regularly appears before the U.S. Securities and Exchange Commission, FINRA and securities...

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Arthur Mitchell Corporate Lawyer Schiff Hardin
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Art is a member of the Corporate and Transactional group. He assists on a variety of transactional matters for both public and private companies, including mergers and acquisitions, private equity transactions, government contracting, general contract drafting, and general corporate governance issues. Art employs a pragmatic mindset when assessing his clients’ needs to map out clear expectations and long-term solutions.

Before attending law school, Art served as Deputy Director of Legislative Affairs for Illinois Attorney General Lisa Madigan. In that role, he advanced policy positions and advocated for statutory changes before the members of the Illinois General Assembly and the Office of the Governor. His experience in government strengthened his ability to communicate complex matters to a diverse audience and discover common interests among stakeholders.

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