SEC Issues Guidance on Interplay Between Form S-3 and Relief Under COVID-19 Order

As many companies consider the need to raise capital, the SEC has provided FAQs that address how taking advantage of the relief provided under the COVID-19 Order may impact offerings of securities using Form S‑3.  As described in our prior posts, the SEC has granted conditional relief to allow reporting companies to delay filings required by the Securities Exchange Act of 1934 due on or before July 1, 2020.

Q:        If a company delays a required filing under the COVID-19 Order, can it use an existing, effective Form S-3 for an offering of securities?

A:        Yes, but with some caveats:

  • Section 10(a)(3) of the Securities Act of 1933 still requires that information in the registration statement not be more than 16 months old, if such information is known to the company and can be furnished without unreasonable effort or expense; and
  • The undertakings required for delayed or continuous offerings under Rule 415 (comprising most offerings on Form S-3) require disclosure of any facts or events that, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement.

As a result, companies should consult with counsel to determine whether updates are needed prior to commencing a shelf takedown off an existing Form S-3.

Q:        If the COVID-19 Order has been relied upon to delay the filing of a Form 10-K, does it delay the date on which eligibility to use Form S-3 is tested?

A:        Yes, the filing date of the Form 10-K — even if that date is extended pursuant to the COVID-19 Order — is the date on which Form S-3 eligibility is retested.  The Form 10-K will be considered timely if all conditions of the COVID-19 Order are met with respect to the filing.

Q:        What if a company has taken advantage of the COVID-19 Order and files a new Form S‑3 between the original due date of a filing and the extended due date?

A:        The Staff will consider the company current and timely in its Exchange Act reports if the COVID-19 Order has been fully complied with, but the company must file the report by the extended due date.  The Staff is unlikely to declare the registration statement effective before the required filing is made, absent compelling and well-documented circumstances.

Leave a Reply

Your email address will not be published. Required fields are marked *