Due to the impact of COVID-19, the Securities and Exchange Commission (SEC) provided certain regulatory relief and Staff guidance to public companies, investment advisers, and investment funds this week.

On March 25, 2020, the Securities and Exchange Commission (SEC) announced the following:

1. Companies unable to timely file disclosure reports required by the Exchange Act to be filed between March 1 and July 1, 2020 due to COVID-19 shall have an additional 45 days to file.

To be entitled to relief, reporting companies must file a Form 8-K by the report’s original filing deadline stating:

• That the company is relying on the order;
• Why the company could not timely file the necessary material;
• An estimate of when the material is expected to be filed;
• If material, a risk factor explaining the impact of the coronavirus on the company’s business;
• To the extent the report cannot be filed due to the inability of a third party to provide an opinion, certification, or report, the reporting company must file a signed statement by the third party to that effect;
• Any such report must be actually filed within 45 days of the original due date; and,
• In the report eventually filed pursuant to this relief, the company must disclose that it is relying on this relief in making the late filing and the reasons therefor.

This relief applies to any requirement to file or furnish materials with the Commission under Exchange Act Sections 13(a), 13(f), 13(g), 14(a), 14(c), 14(f), 15(d) and Regulations 13A; Regulation 13D-G (except for those provisions mandating the filing of Schedule 13D or amendments to Schedule 13D), 14A, 14C and 15D; and Exchange Act Rules 13f-1 and 14f-1, as applicable.

2. A 45-day extension of time to file and deliver Form ADV and Form PF for investment advisers for which the original due date is on or prior to June 30, 2020. The SEC exempted the following requirements if the below conditions are met:

• Registered investment advisers are exempt from filing an amendment to Form ADV and requirements related to the delivery of Form ADV Part 2;
• Exempt reporting advisers are exempt from filing reports on Form ADV; and
• Registered investment advisers required to file Form PF are exempt from those requirements.

Conditions:

• Due to effects related to COVID-19, the registered investment adviser is unable to meet a filing deadline or delivery requirement;
• For the filing of Form ADV:
  • The investment adviser promptly notifies the SEC via email ([email protected]); and
  • The investment adviser discloses on its website that it is relying on the order.
• For the filing of Form PF, the investment adviser must notify the SEC via email ([email protected]) stating that is relying on the order; and
• As soon as practicable, but not later than 45 days after the original due date for filing or delivery, the investment adviser files Form ADV or Form PF, as applicable, and delivers the brochure (or summary of material changes) and brochure supplement.

3. An extension of time through August 15, 2020 to hold in-person board meetings for investment companies, provided that:

• The current or potential effects of COVID-19 make reliance on this order necessary or appropriate;
• The votes required are cast at a meeting where the directors participating are able to simultaneously hear each other; and
• The board of directors, including a majority of uninterested directors, ratifies these actions by votes cast at the next in person board meeting.

Additionally, the Division of Corporation Finance issued Disclosure Guidance Topic No. 9, which:

• provides guidance regarding drafting COVID-19-related disclosure;
• reminds issuers of potential insider-trading issues while grappling with material non-public information related to COVID-19; and
• provides issuers with some relief regarding presenting non-GAAP financial measures in earnings releases in an attempt to address the impact of COVID-19 on earnings where a GAAP financial measure is not available.

For public companies and individuals responsible for drafting disclosure, we strongly recommend reading the Staff’s guidance with respect to COVID-19 related disclosure and the use of non-GAAP financial measures.

Finally, the Staff of the various SEC Divisions have also provided some relief to public companies and others who are required to make filings on EDGAR, the SEC’s electronic date filing and recovery system, and required to obtain manual signatures for those filings.

Rule 302(b) of Regulation S-T requires every signatory to a document electronically filed with the SEC under federal securities laws to manually sign a signature page or other document authenticating or acknowledging such signatory’s signature as it appears in typed form within the electronic filing (the “Authenticating Document”). The Authenticating Document must be executed before or at the time of the electronic filing and must be kept by the electronic filer for five years.

In an announcement on March 24, 2020, the Staff acknowledged that some entities subject to Regulation S-T may not be able to satisfy all of the Rule 302(b) requirements due to circumstances related to COVID-19. Accordingly, the Staff stated that they will not recommend enforcement action with respect to the Rule 302(b) requirements if the following conditions are met:

1.   The signatory (a) retains the Authenticating Document and provides such Authenticating Document to the electronic filer as soon as reasonably practicable for retention by the filer in the ordinary course and/or (b) sends a photograph or pdf of the Authenticating Document to the electronic filer when it is signed;

2.   The Authenticating Document includes the date and time of execution; and

3.   The electronic filer establishes and maintains policies and procedures to govern the process of obtaining and retaining the Authenticating Document(s).

While the Staff stated that entities are expected to comply with the requirements of Rule 302(b) to the fullest extent practicable, the announcement provides some relief to entities attempting to operate and comply with SEC rules and regulations within the confines of the COVID-19 pandemic and related state-issued stay-at-home orders.