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SEC updates Compliance and Disclosure Interpretations

Apr 22, 2020

The United States Securities and Exchange Commission (SEC) recently updated its Compliance and Disclosure Interpretations (CDI) to confirm that its recent orders extending the due date for SEC filings by up to 45 additional days in light of COVID-19 pandemic are applicable to the incorporation by reference of disclosure into Part III of Form 10-K. (Additional information on the prior orders is available here and here.)

Part III of Form 10-K is an important part of a registrant’s overall annual public disclosures as it includes information relating to corporate governance, directors and executive officers, security ownership by certain beneficial owners and management, and executive and director compensation. A registrant generally is permitted to omit some or all of the Part III information from its Form 10-K when filed if (i) the omitted disclosure is incorporated by reference from the registrant’s proxy statement, and (ii) the proxy statement is filed within 120 days after the end of the registrant’s fiscal year end. The SEC’s prior orders were unclear as to whether the deadline for incorporating Part III information into a Form 10-K was provided the same exemptive relief as other SEC filings. As a result, it created uncertainty for many registrants as they tried to coordinate the timing of Form 10-K and proxy statement filings in connection with annual meeting plans and preparations.

By way of example, if a non-accelerated, smaller reporting company filer with a December 31 fiscal year end elected to take advantage of the relief under the prior orders, its Form 10-K for 2019 would be due on May 14, 2020 (rather than the pre-COVID-19 due date of March 30, 2020) but its proxy statement would have been due April 29, 2020 (120 days following the fiscal year end). Obviously, this would create a disconnect in terms of timing and left many practitioners with questions about the best way to address such disconnect.

Thankfully, in new Exchange Act Form CDI Question 104.18, the SEC clarified that the 45-day extension also applies to proxy statements containing Part III information. As a result, absent an earlier date required by state law or the registrant’s governing documents, a registrant with a December 31, 2019 fiscal year end would not need to file its proxy statement until June 15, 2020, so long as it followed the Form 8-K notice requirements set forth by the SEC in the prior orders. The CDI also indicated that if the registrant had already taken advantage of the prior orders’ relief for its Form 10-K and remained silent about its ability to timely provide the Part III information, then the registrant would need to either include such information in its Form 10-K, or furnish a second Form 8-K before the original 120-day deadline (and then file the Part III information no later than 45 days following the original 120-day deadline by including it in a Form 10-K/A or definitive proxy statement). Of course, the registrant need only provide one Form 8-K if it addresses its plan for the Form 10-K and Part III information simultaneously. Further, in the CDI the SEC also indicated that registrants could furnish a Form 8-K and utilize the 45-day extension to the proxy statement filing even in cases where the registrant did not otherwise utilize the relief in the prior orders to delay filing of the Form 10-K.

In summary, CDI Question 104.18 confirmed that the SEC’s COVID-19 filing relief will indeed apply to Part III information deadlines in the same manner as the relief applies to a registrant’s other SEC filing deadlines.

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