In a press release distributed late last week, the United States Securities and Exchange Commission announced that it will be providing additional temporary regulatory assistance to market participants affected by the novel coronavirus (COVID-19). The relief covers three specific spheres: (1) parties needing to gain access to make filings on the EDGAR system; (2) company filing obligations under Regulation A and Regulation Crowdfunding; and (3) a filing requirement for municipal advisors.
The SEC notes that its staff will continue to closely track developments and, if appropriate, consider additional relief from other regulatory requirements for those affected by the pandemic. In the meantime, Michelman & Robinson breaks down the agency’s latest moves in Q&A format.
Relief from the Form ID Notification Requirement
Q. I need to apply for an EDGAR Code in order to make an SEC filing, but I don’t have access to a notary, what should I do?
A. Subject to certain conditions, the SEC adopted a temporary final rule during the period March 26 through at least July 1, 2020, providing relief from the Form ID notarization requirement where circumstances related to COVID-19 render it impossible (or impracticable) to obtain a notarization in a timely manner.
Q. What do I need to do to take advantage of this accommodation?
A. The filer must indicate on a manually signed Form ID that the filer is unable to obtain notarization due to COVID-19 and, by way of this temporary relief, the SEC will provide the filer with an EDGAR filer number. After receiving the EDGAR codes, the filer must, within 90 day of filing, submit a PDF copy of a notarized, manually signed Form ID application. In the event the filer does not provide the notarized Form ID to the SEC within 90 days as required, the SEC may then deactivate the filer’s EDGAR access codes. Of note, filers relying on this temporary final rule to access EDGAR may be required to provide supplemental documents to support their applications and otherwise assist SEC staff in validating the request. Also, in order to counteract potential abuses, the SEC staff is authorized to deactivate EDGAR codes when there is reason to believe that a filer has made illegitimate filings inconsistent with the protection of investors under the temporary final rule.
Relief from Filing Deadlines Pursuant to Regulation A and Regulation Crowdfunding
Q. My company is conducting an offering under Regulation A or Regulation Crowdfunding, has the SEC offered any extension to applicable filing deadlines?
A. Just as the SEC previously offered 45-day extensions for filing deadlines for publicly reporting issuers, similar relief is now being provided to Regulation A and Regulation Crowdfunding issuers. The temporary final rule (linked above) extends the filing deadlines for specified periodic and current reports and forms that companies are obligated to file under Regulation A and Regulation Crowdfunding. The 45-day filing extension applies to certain disclosure reports that would have been due between March 26 and May 31, 2020.
Q. My company has been affected by the COVID-19 pandemic; how do we take advantage of this filing extension?
A. Regulation A or Regulation Crowdfunding issuers may take advantage of the 45-day filing extension where the following conditions are met:
- The issuer is not able to meet a filing deadline due to circumstances related to COVID-19
- The issuer must disclose on its website or, if a Regulation Crowdfunding issuer, the issuer must disclose through an intermediary’s platform or otherwise directly notify investors, that it is relying on the temporary filing extension
- The issuer must file the applicable report within 45 days after the original due date
- The issuer must disclose in its filing that it has relied on the temporary rule, along with the reason why it was unable to file its report or form on a timely basis
Q. What forms does the SEC’s relief apply to?
A. For Regulation A, the temporary final rule applies to:
- Post-qualification amendments required at least every 12 months after the qualification date, including updated financial statements
- Annual reports on Form 1-K
- Semi-annual reports on Form 1-SA
- Special financial reports on Forms 1-K or 1-SA
- Current reports on Form 1-U
- Exit reports on Form 1-Z
For Regulation Crowdfunding, the relief applies to:
- Annual reports on Form C-AR
- Progress updates on Form C-U
- Termination of reporting on Form C-TR
Be aware that as there are no filing deadlines surrounding the related offering circulars for Regulation A and Regulation Crowdfunding, the relief does not apply to a Form 1-A that has not been qualified under Regulation A, nor does it apply to Form C or Form C/A under Regulation Crowdfunding.
Relief for Municipal Advisors in Submitting Annual Updated Filings
Q. What type of relief is available for municipal advisors?
A. The SEC has made available similar extensions related to annual filings for municipal advisors. The agency has issued a Temporary Conditional Exemptive Order to relieve municipal advisors from potential compliance issues related to the timely submission of annual updated filings (e.g., Form MA). Subject to certain conditions, this order gives affected municipal advisors an additional 45 days to file annual updates to Form MA that would have been due between March 26 and June 30, 2020.
Q. As a municipal advisor affected by the COVID-19 pandemic, how do I take advantage of the filing extension?
A. To avail itself of the aforementioned order, a municipal advisor must provide a brief description of the reasons why it could not file in a timely manner, and those circumstances must be related to current or potential effects of COVID-19. Further, the municipal advisor relying on the order must take the following actions:
- Promptly notify the SEC staff via email at [email protected], which notification is to include the brief description of the reasons it cannot meet the filing deadline
- Disclose on its public website (or to its clients if it does not have a public website) the same information it provides the SEC staff regarding why it cannot timely meet its filing deadline
- File the annual update to Form MA as soon as practicable, but not later than 45 days after the original filing due date
As mentioned, the SEC Commissioner has expressed that the SEC may issue further filing extensions, together with additional relief as circumstances warrant. M&R will continue to monitor the SEC for relevant guidance, notices and announcements.
This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.