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.
Securities Regulation
Now Available: COVID-19 Resources for Public Companies
Recognizing that public companies continue to be inundated with developing disclosure and governance requirements due to the COVID-19 pandemic, Gibson Dunn has created a list (with hyperlinks) of recent publications, releases, guidance, updates, and other useful resources from the SEC, PCAOB, NYSE, Nasdaq, proxy advisory firms, institutional investors, various state governors, and other relevant entities. This list will be updated as new resources are released. The most current version can be accessed by clicking here.
SEC Chairman and Division of Corporation Finance Director Issue Joint Statement on COVID-19 Disclosures
On April 8, 2020, Securities and Exchange Commission (“SEC”) Chairman Jay Clayton and Division of Corporation Finance Director Bill Hinman issued a joint statement, available here (the “Statement”) stressing the importance of COVID-19 disclosures (particularly forward-looking disclosures), and urging companies to provide as much information as is practicable regarding their current financial and operational status, as well as operational and financial planning. The Statement notes that the COVID-19 pandemic has shifted the global economic landscape and that the SEC recognizes that workers and businesses are facing profound challenges.
NYSE Provides Temporary Waiver of Certain Shareholder Approval Requirements for Private Placements
On April 6, 2020, the Securities and Exchange Commission (“SEC") announced (available here) that it has immediately approved the New York Stock Exchange’s (“NYSE") proposed rule changes that temporarily waive certain shareholder approval requirements relating to private investments in public equity (PIPEs). The rule changes were proposed in light of the unprecedented disruption caused by COVID-19 and will apply through June 30, 2020. While these temporary waivers to Section 312.03 of the NYSE Listed Company Manual (the “Listing Manual") (available here) provide companies added flexibility in conducting PIPEs more quickly, companies must still obtain shareholder approval if required under any other applicable rule, including the equity compensation requirements of Section 303A.08 or the change of control requirements of Section 312.03(d) of the Listing Manual. For more information, please see our recent client alert (available here) discussing key considerations for PIPE transactions.
Disclosure Considerations: One Month Into the U.S. Outbreak
The COVID‐19 outbreak is creating a great deal of uncertainty in the global economy and in our daily lives. Companies worldwide are facing unique legal and operational challenges related to the outbreak and the downturn in the economy. In the midst of this constantly evolving landscape, U.S. publicly traded companies must continue to consider how the situation impacts their disclosure.
SEC Extends Conditional Exemptions From Reporting and Proxy Delivery Requirements for Public Companies Affected By COVID-19 For Reports due on or before July 1, 2020 4/1/2020
On March 25, 2020, the Securities and Exchange Commission (the “Commission") announced (available here) that it is providing a 45-day extension for companies to file certain disclosure reports that would otherwise have been due on or before July 1, 2020 (Order available here). This is an extension of the conditional reporting relief covered by the Commission’s relief (Original Order available here) for certain public company filing obligations under the federal securities laws, issued on March 4, 2020 (as previously discussed in our post here, and updated here), to companies impacted by the novel coronavirus disease 2019 (“COVID-19"). In addition, the Commission’s Division of Corporation Finance (the “Division") issued on March 25, 2020 its current views regarding disclosure considerations and other securities law matters related to COVID-19 (available here).
SEC Amends Accelerated and Large Accelerated Filer Definitions to Reduce Burdens on Smaller Reporting Companies – Effective April 27, 2020
On March 12, 2020, the Securities and Exchange Commission announced (available here) the adoption of a final rule (available here) amending the “accelerated filer” and “large accelerated filer” definitions. The amendments will be effective April 27, 2020 and first impact annual reports on Form 10-K due after the effective date.
SEC Provides Conditional Regulatory Relief and Additional Disclosure Guidance for Companies Affected by the Coronavirus Disease 2019 (COVID-19)
On March 4, 2020, the Securities and Exchange Commission (the “Commission”) announced (available here) that it is providing conditional regulatory relief (Order available here) for certain filing obligations under the federal securities laws to companies impacted by the coronavirus disease 2019 (“COVID-19”), including “U.S. companies located in the affected areas, as well as companies with operations in those regions.
SEC Amends Rules to Encourage Issuers to Conduct Registered Debt Offerings
On March 2, 2020, the Securities and Exchange Commission (the “Commission”) announced (available here) the adoption of amendments to the financial disclosure requirements applicable to registered debt offerings that include credit enhancements, such as subsidiary guarantees, in an effort to “improve the quality of disclosure and increase the likelihood that issuers will conduct debt offerings on a registered basis."
Direct Listing Update: Revised Proposal for Primary Offerings
On December 3, 2019, Gibson Dunn published A Current Guide to Direct Listings discussing, among other things, a proposal submitted to the U.S. Securities and Exchange Commission (SEC) by the New York Stock Exchange (NYSE)that would permit a privately-held company to conduct a direct listing in connection with a primary offering. On December 11, 2019, the NYSE withdrew its proposal (as reported in An Interim Update on Direct Listing Rules) and was expected to submit a revised proposal consistent with past proposals related to direct listings. On December 11, 2019, the NYSE submittedthe revised proposal.