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Coronavirus Disclosure Considerations for SEC Filings

    Client Alerts
  • March 05, 2020

For companies that have yet to file their Form 10-K or companies that have filed their Form 10-K but are already thinking about their next filing with the Securities and Exchange Commission (SEC), preparing disclosures related to COVID-19 is becoming an increasingly important and difficult task. Below are some considerations when preparing a company’s next filing.

  • Consider whether your forward-looking statement "safe harbor" language should be updated to list the coronavirus as a factor that could cause forward-looking statements to be materially different from actual results.
  • When preparing the description of the company’s business, Item 101 of Regulation S-K touches on areas that may be impacted by the coronavirus such as the sources and availability of raw materials or dependence on customers. As the economic impact of the coronavirus outbreak on a company evolves, continuing to review these types of disclosures is important to make sure they are accurate and timely.
  • There are several potential areas for disclosure updates in the “Risk Factors” section, including:
    • Disclosures regarding natural disasters or epidemics
    • Impact to supply chain
    • Impact to international sales
    • Contract cancellation
    • Business redundancies and continuity plans
    • Enhanced cybersecurity and data privacy risks or incidents
    • Impact to financial results
  • Disclosures in the “Management’s Discussion and Analysis” section should be looked at closely. It’s important to remember that while the news coverage regarding the coronavirus’s impact on the economy has been primarily negative, some companies have experienced an increase in business during the outbreak. If there are any known trends, favorable or unfavorable, that might reasonably be deemed to be material to the company as a result of the outbreak, MD&A disclosures should discuss these trends.
  • Companies should be mindful of any Form 8-K filing obligations that can arise during this time. For example, if a material contract is modified or terminated due to the coronavirus, a Form 8-K may need to be filed pursuant to Item 1.01 or Item 1.02, respectively. 
  • As most of the global impact of the outbreak began in 2020, the Form 10-K recently filed for calendar year companies is just the beginning of thinking about and making coronavirus-related disclosures. Upcoming earnings releases and Form 10-Qs will likely see increased disclosures regarding the outbreak as the effect on a company may become more apparent.
  • Also, be aware of the Regulation FD implications of any communications outside of your SEC filings to analysts, investors, and others who may pressure personnel throughout your company for information regarding the outbreak.
  • Finally, in a bit of good news, the SEC on March 4 provided conditional relief from its filing deadlines for companies negatively impacted by the coronavirus. As a general matter, and subject to a number of qualifications, companies that would otherwise have reports due from March 1 to April 30 may take an additional 45 days to file their Forms 10-K, 10-Q, or 8-K and definitive proxy statements. The SEC’s order does not, however, apply to Form 3 and 4 filings. The primary condition to utilizing this relief is that a company must furnish to the SEC by the original filing deadline a Form 8-K stating that it is relying on the SEC’s order and providing certain specified information.

For more information, please contact us or your regular Parker Poe contact.