News & Insights
Mar 26, 2020
Yesterday, the SEC issued updated guidance regarding public company reporting obligations in light of the coronavirus pandemic (COVID-19).
To augment our recent article “COVID-19: What you need to know now regarding your SEC disclosure obligations,” in the updated guidance, the SEC encourages companies to focus on particular questions related to COVID-19 when crafting disclosure in their upcoming earnings releases, quarterly and annual reports and proxy statements as follows:
In addition, as we covered in our previous article, the SEC reminded companies and their insiders of their obligations to comply with Regulation FD and its prohibition against selectively disseminating material, non-public information, and insider trading laws which prevent trading activity when in possession of material, non-public information.
The SEC also (i) recognized that the impact of COVID-19 may present a number of novel or complex accounting issues that, depending on the particular facts and circumstances, may take time to resolve, (ii) acknowledged that COVID-19 will likely make it more difficult for companies and their auditors to complete the work required to maintain timely filings, and (iii) encouraged companies to proactively address financial reporting matters earlier than usual.
Finally, the SEC reminded companies of their obligation to comply with, and reiterated with specificity certain portions of, the federal securities laws relating to the presentation of non-GAAP financial metrics. The SEC acknowledged that there may be situations when there may not be a GAAP financial measure available at the time of the earnings release because the measure may be impacted by COVID-19-related adjustments that may require additional information and analysis to complete. In these situations, the SEC stated that it would not object to companies reconciling a non-GAAP financial measure to preliminary GAAP results that either include provisional amount(s) based on a reasonable estimate, or a range of reasonably estimable GAAP results. In such instances, however, companies should limit the measures in its presentation to those non-GAAP financial measures it is using to report financial results to its Board of Directors. Further, with respect to a periodic report such as a Form 10-K or a Form 10-Q in which GAAP metrics are required to be presented, the SEC stated that companies should reconcile to GAAP results and not include provisional amounts or a range of estimated results.
See below for additional links discussing your company’s SEC obligations during the COVID-19 pandemic: “Coronavirus (COVID-19): SEC issues dilatory relief for issuers affected by the coronavirus,” “Public companies may consider virtual annual meetings in light of coronavirus,” and “SEC extends coronavirus (COVID-19) relief for issuers.” If you have any questions regarding this post or would like to discuss further your company’s SEC reporting obligations, please contact any of the Related Professionals, any other member of Waller’s Capital Markets & Securities practice or your regular Waller contact at (615) 244-6380.
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