What COVID-19 Means for Public Companies: SEC disclosures, meeting logistics and filings.

• Author: Richman, Laura D.
• Position: THE AGE OF RISK: SEC Reporting

COVID-19 has raised a number of issues specific to public companies that file reports with the U.S. Securities and Exchange Commission (SEC). These matters include the application of SEC disclosure requirements to the COVID-19 situation, logistics for upcoming shareholder meetings and administrative challenges in complying with SEC requirements.

There are many areas where existing SEC rules, while not expressly mentioning pandemics, could require disclosure of the impact of COVID-19. Such disclosure considerations could arise in the context of an annual or quarterly report. Or there could be an issue that requires more immediate disclosure through a current report on Form 8-K (or, if a foreign private issuer, a Form 6-K) or a press release. Depending on circumstances, COVID-19 disclosures also may need to be discussed in registration statements, proxy statements or information statements. Recently, the SEC staff issued guidance on disclosure and other securities law obligations that companies should consider with respect to COVID-19.

Here are key issues board members should consider in the coming days, weeks and months.

Risk Factors. With the impact from COVID-19 growing rapidly, companies may become increasingly aware of additional ways in which the pandemic is posing specific risks beyond what they may have previously disclosed. It would be useful for companies to begin drafting more detailed risk factors relating to COVID-19 for inclusion in their next SEC filing that requires risk factors, such as an upcoming annual or quarterly report, or, if the company will be offering securities in a public offering, a registration statement. To keep the markets updated generally, a company might determine it appropriate to include a new or modified COVID-19 risk factor in a current report.

Forward-Looking Statements. Companies disclosing how COVID-19 may affect their future performance should consider framing their discussions to take advantage of the safe harbor for forward-looking statements set forth in the securities laws. For example, when discussing COVID-19 matters, companies may want to include an explanation, indicating that actual results may be materially different and using words such as "believes," "expects" or "hopes." Companies may also want to expressly include in their more general discussions the impact of COVID-19 as a factor that could impact actual results.

Management's Discussion and Analysis. Management's discussion and analysis (MD&A) must include information that a company "believes to be necessary to an understanding of its financial condition, changes in financial condition and results of operations." With COVID-19 impacting so many companies...