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SEC Publishes FAQ On COVID-19 Effect On S-3 Registration Statements

The SEC has issued FAQ on Covid-19 issues, including the impact on S-3 shelf registration statements.  The SEC issued 4 questions and answers consisting of one question related to disclosure and three questions related to S-3 shelf registrations.



Confirming prior guidance, the SEC FAQ sets forth the required disclosures in the Form 8-K or 6-K filed by a company to take advantage of a Covid-19 extension for the filing of periodic reports.  In particular, in the Form 8-K or Form 6-K, the company must disclose (i) that it is relying on the COVID-19 Order (for more information on the Order, see HERE); (ii) a brief description of the reasons why the company could not file the subject report, schedule or form on a timely basis; (iii) the estimated date by which the report, schedule or form is expected to be filed; and (iv) a company-specific risk factor or factors explaining the impact, if material, of COVID-19 on the company’s business.   Also, if the reason the report cannot be filed timely relates to the inability of any person, other than the company, to furnish any required opinion, report or certification, the company must also attach, as an exhibit to the Form 8-K or Form 6-K, a statement signed by such person stating the specific reasons why the person is unable to furnish the required opinion, report or certification.  The Form 8-K or 6-K must be filed with the SEC on or before the original due date of such report.

Furthermore, when the delayed report is filed it must contain disclosures that it was delayed based on the Covid-19 Order and reiterate the reasons it could not timely file the report.

Effect on Form S-3

S-3 eligibility and the ability to take down periodic offerings from an effective S-3 registration statement is often the lifeblood for publicly traded companies, especially during times of financial hardship.  For a detailed review of S-3 eligibility, see HERE.

Generally speaking, a company must be current in its SEC reporting requirements in order to file or utilize an existing S-3 shelf.  Moreover, a company must re-assess its eligibility to continue to use the shelf each time it files an update to the registration statement, which could be through a post-effective amendment or a Form 10-K which is automatically incorporated by reference and acts as a prospectus update.

The SEC has issued three question-and-answer FAQs related to the ability to use or file an S-3 shelf registration statement while relying on the Order allowing for an extension of the filing of periodic reports due to Covid-19.

The first question confirms that a company can continue to conduct takedowns using an already effective registration statement while relying on the Covid-19 Order for an extension to the filing date of a report, including a Form 10-K.  However, in order to continue to use an existing S-3, the company must make a determination that the prospectus, as it exists at that time, complies with Section 10(a) of the Securities Act.  This is no different than at any other time a shelf is used – that is, it is always incumbent upon a company to believe that its prospectus complies with Section 10(a).   Section 10(a)(3) requires that when a prospectus is used more than nine months after the effective date of the registration statement, the information contained in the prospectus cannot be older than 16 months.

However, Section 10(a)(3) has a qualifier that information must be updated at 16 months “so far as such information is known to the user of such prospectus or can be furnished by such user without unreasonable effort or expense.”  The new SEC FAQ provides that “[A]lthough Section 10(a)(3) may permit registrants relying on the COVID-19 Order to conduct a takedown using a prospectus that contains information older than sixteen months in the event that updated information cannot be furnished without unreasonable effort or expense, registrants and their legal advisers will need to determine when it is appropriate to update the prospectus. Registrants are responsible for the accuracy and completeness of their disclosure.”

In addition, shelf offerings pursuant to Rule 415 require a company to file a post-effective amendment (which could be via a Form 10-K that is forward incorporated by reference) to reflect any facts or events arising after the effective date which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement.  In other words, if the information in the prospectus is materially inaccurate, it cannot be used.

The second question confirms that a company must re-assess its eligibility to continue to use Form S-3 at the time of the filing of its Form 10-K.  In general, each time a company files a post-effective amendment to its Form S-3, including through the filing of a Form 10-K, the company must assess its eligibility to continue to use the Form.  For example, to continue to be eligible the company must have timely filed all of its periodic reports (with some limited Form 8-K exceptions) for a period of at least 12 calendar months.  For a complete and detailed list of eligibility requirements, see HERE.  Where the company has relied on the Covid-19 Order to extend the filing deadline for that Form 10-K, it can make its eligibility assessment at the time of filing under the new deadline.

The third question confirms that a company may file a new s-3 registration statement between the original due date of a required filing and the due date as extended by the COVID-19 Order, even if the company has not yet filed the required periodic report.  The SEC will consider a company current and timely in its Exchange Act reports as long as it timely filed the Form 8-K for an extension of the deadline for a particular report such as a Form 10-Q or 10-K.  However, although the company can file a new Form S-3, the SEC will not likely accelerate its effectiveness until the delayed periodic report has been filed.  The company will no longer be considered current and timely, and will lose eligibility to file new registration statements on Form S-3, if it fails to file the required report by the due date as extended by the COVID-19 Order.

The Author

Laura Anthony, Esq.

Founding Partner

Anthony L.G., PLLC

A Corporate Law Firm


Securities attorney Laura Anthony and her experienced legal team provide ongoing corporate counsel to small and mid-size private companies, OTC and exchange traded public companies as well as private companies going public on the Nasdaq, NYSE American or over-the-counter market, such as the OTCQB and OTCQX. For more than two decades Anthony L.G., PLLC has served clients providing fast, personalized, cutting-edge legal service.  The firm’s reputation and relationships provide invaluable resources to clients including introductions to investment bankers, broker-dealers, institutional investors and other strategic alliances. The firm’s focus includes, but is not limited to, compliance with the Securities Act of 1933 offer sale and registration requirements, including private placement transactions under Regulation D and Regulation S and PIPE Transactions, securities token offerings and initial coin offerings, Regulation A/A+ offerings, as well as registration statements on Forms S-1, S-3, S-8 and merger registrations on Form S-4; compliance with the Securities Exchange Act of 1934, including registration on Form 10, reporting on Forms 10-Q, 10-K and 8-K, and 14C Information and 14A Proxy Statements; all forms of going public transactions; mergers and acquisitions including both reverse mergers and forward mergers; applications to and compliance with the corporate governance requirements of securities exchanges including Nasdaq and NYSE American; general corporate; and general contract and business transactions. Ms. Anthony and her firm represent both target and acquiring companies in merger and acquisition transactions, including the preparation of transaction documents such as merger agreements, share exchange agreements, stock purchase agreements, asset purchase agreements and reorganization agreements. The ALG legal team assists Pubcos in complying with the requirements of federal and state securities laws and SROs such as FINRA for 15c2-11 applications, corporate name changes, reverse and forward splits and changes of domicile. Ms. Anthony is also the author of SecuritiesLawBlog.com, the small-cap and middle market’s top source for industry news, and the producer and host of LawCast.com, Corporate Finance in Focus. In addition to many other major metropolitan areas, the firm currently represents clients in New York, Los Angeles, Miami, Boca Raton, West Palm Beach, Atlanta, Phoenix, Scottsdale, Charlotte, Cincinnati, Cleveland, Washington, D.C., Denver, Tampa, Detroit and Dallas.

Ms. Anthony is a member of various professional organizations including the Crowdfunding Professional Association (CfPA), Palm Beach County Bar Association, the Florida Bar Association, the American Bar Association and the ABA committees on Federal Securities Regulations and Private Equity and Venture Capital. She is a supporter of several community charities including siting on the board of directors of the American Red Cross for Palm Beach and Martin Counties, and providing financial support to the Susan Komen Foundation, Opportunity, Inc., New Hope Charities, the Society of the Four Arts, the Norton Museum of Art, Palm Beach County Zoo Society, the Kravis Center for the Performing Arts and several others. She is also a financial and hands-on supporter of Palm Beach Day Academy, one of Palm Beach’s oldest and most respected educational institutions. She currently resides in Palm Beach with her husband and daughter.

Ms. Anthony is an honors graduate from Florida State University College of Law and has been practicing law since 1993.

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