The amendments to Items 101, 103, and 105 of Regulation S-K that were adopted by the SEC on August 26, 2020 (discussed in our previous client alert, available here) were published in the Federal Register today, October 8, 2020. As a result, the amendments will go into effect on Monday November 9, 2020 (the first business day following 30 days after publication in the Federal Register). November 9 is also the last day for calendar companies that are large accelerated filers or accelerated filers to file the Q3 10-Q.
Miscellaneous
SEC Provides New Option for Extending Confidential Treatment
The SEC just made it a little easier to maintain the confidentiality of sensitive information that is the subject of a soon-to-expire confidential treatment order. As discussed below, under the SEC’s latest guidance a company can now use the simplified confidential treatment process available for new exhibits when seeking to extend confidential treatment of previously filed exhibits.
NYSE’s Attempt to Allow Primary Offerings in Direct Listings Hits a Snag
Direct listings have emerged as one of the new innovative pathways to the U.S. public capital markets, thought to be ideal for entrepreneurial companies with a well-recognized brand name or easily understood business model. We have also found it attractive to companies that are already listed on a foreign exchange and are seeking a dual listing in the United States. Because direct listings are currently limited to secondary offerings by existing shareholders, they are not an attractive option for companies seeking to raise new capital in connection with a listing.
SEC Reduces Filing Fee Rate Effective October 1, 2020
On August 26, 2020, the Securities and Exchange Commission announced that starting October 1, 2020, the fees that public companies and other issuers must pay to register securities with the SEC will be set at $109.10 per million dollars of securities registered. This is a reduction from the rate for 2020 of $129.80.
SEC Issues Guidance Regarding Submission of Supplemental Materials and Confidential Treatment Requests in Light of COVID-19 Concerns
On August 4, 2020, the Division of Corporation Finance (the “Division") of the Securities and Exchange Commission (the “SEC") issued guidance relating to the submission of supplemental materials and information subject to Rule 83 confidential treatment requests in light of COVID-19 concerns (available here). The Division is providing a temporary secure file transfer process for the submission of supplemental materials pursuant to Securities Act Rule 418 and Exchange Act Rule 12b-4, including supplemental materials subject to a Rule 83 confidential treatment request. This secure file transfer process is a temporary accommodation to the SEC’s rules and procedures for receiving confidential information (as discussed in a prior client alert, available here), due to ongoing health and safety concerns related to COVID-19.
SEC Staff provides additional disclosure guidance related to COVID-19 impact
Due to the ongoing assessment of the impact of COVID-19 on companies’ operations, liquidity and capital resources and overall economic and market conditions, companies should take special care in preparing for their quarterly reporting. To aid in this effort, the staff (the “Staff") of the Securities and Exchange Commission (“SEC") has posted a new set of questions that companies should consider in evaluating whether certain disclosures should be included in their earnings release and, in light of its potential materiality, in the management discussion and analysis (“MD&A") included in the periodic reports (e.g., the Form 10-Q for second quarter 2020).
Key Considerations for Issuers and Auditors Regarding Going-Concern Analysis
Issuers in the United States and their auditors have related, but distinct, obligations to evaluate on a periodic basis whether there is substantial doubt about the issuer’s ability to continue as a going concern. In normal times, this evaluation, conducted with an appropriate level of diligence, results as to almost all major public companies in the conclusion that there is no substantial doubt about the entity’s ability to meet its obligations in the months to come.
SEC Releases COVID-19 FAQs to Provide Guidance on Disclosure Requirements and Form S-3
The SEC Division of Corporation Finance staff (the “Staff") has released a list of FAQs on COVID-19 for registrants (available here) that provides guidance on required disclosures under the SEC’s COVID-19 Order and the application of such order to Form S-3 filings. The FAQs and responses provided by the Staff as of May 5, 2020 are summarized below—please follow the link above to read the full text of the FAQs.
Nasdaq Provides Temporary Exemption from Certain Shareholder Approval Requirements in Response to COVID-19
On May 4, 2020, the SEC announced (available here) that it has immediately approved proposed rule changes by The Nasdaq Stock Market LLC (“Nasdaq") that provide listed companies with a temporary exception from certain shareholder approval requirements under the Nasdaq Rules (the “Rules") through and including June 30, 2020 (available here).
NYSE and Nasdaq Propose Temporary Waivers of Certain Market Capitalization and Trading Price Listing Requirements
In light of the market downturn and similar to action taken in the Great Recession, the NYSE and Nasdaq have proposed temporary waivers of certain market capitalization and trading price listing requirements.