This short summary provides a recap of some additional U.S. Securities and Exchange Commission (SEC) announcements during the month of March. Earlier in the month, the SEC announced:
- Shareholder annual meetings should be postponed or held virtually
- U.S. companies with filing deadlines have an additional 45 days to file reports (applies to filings with the original due dates falling between March 1 and July 1, 2020). This announcement was issued on March 25, approximately three weeks after the first announcement that included companies with filings only through April 30, 2020.
• The amendment is only applicable to public companies that are unable to meet filing deadlines due to COVID-19-related circumstances. Additionally, companies must file an 8-K to disclose the use of this grace period with an explanation of why they can’t meet the deadline and when they expect to file.
Additional amendments that have been announced this month include:
Accelerated and Large Accelerated Filer Definitions
The SEC adopted amendments to the “accelerated filer” and “large accelerated filer” by providing scaled disclosure and other accommodations to reduce unnecessary burdens for new and smaller issuers. The amendments will:
- Exclude from the accelerated and large accelerated filer definitions an issuer that is eligible to be a smaller reporting company and had annual revenues of less than $100 million in the most recent fiscal year for which audited financial statements are available. Business development companies will be excluded in analogous circumstances.
- Increase the transition thresholds for an accelerated and a large accelerated filer becoming a non-accelerated filer from $50 million to $60 million and for exiting large accelerated filer status from $500 million to $560 million.
- Add a revenue test to the transition thresholds for exiting both accelerated and large accelerated filer status.
- Add a check box to the cover pages of annual reports on Forms 10-K, 20-F, and 40-F to indicate whether an internal control over financial reporting (ICFR) auditor attestation is included in the filing.
The final amendments will become effective 30 days after publication in the Federal Register and apply to an annual report filing due on or after the effective date.
SEC Provides Relief to Smaller Reporting Companies on ICFR Attestation
On March 12, the SEC adopted the highly anticipated amendments to the accelerated and large accelerated filer definitions. As a result, an issuer that is eligible to be a smaller reporting company (SRC) with less than $100 million in annual revenue will no longer be required to obtain an audit of its ICFR and will have more time to file its periodic reports on Forms 10-K and 10-Q.
Please contact a Friedman professional if you have any questions about the impact of COVID-19 on your company.