In a Statement (available here) on April 8, 2020, SEC Chairman Jay Clayton and Corporation Finance Division Director Bill Hinman supplemented earlier SEC guidance (discussed here) to emphasize the importance of disclosures by public companies about the effects of the COVID-19 pandemic on their operations, financial condition and liquidity and their plans for handling those effects.
The Statement focuses primarily on informal communications through earnings releases and analyst calls, especially those coming up related to the first quarter just ended. The guidance also will be relevant for the preparation of the MD&A, including in the next Form 10-Q. It emphasizes the importance of forward-looking disclosures during these challenging and evolving times, noting that historical information may be relatively less significant because of the dramatic changes that have taken place making that information less predictive of future results. The Statement seeks to encourage these forward-looking disclosures by noting that good faith efforts to provide appropriately framed forward-looking information, in view of all the uncertainties, are unlikely to be second guessed by the SEC. In addition, it encourages companies to use the safe-harbors for forward-looking statements to mitigate legal risk and thus make companies more comfortable providing that information.
A few specific points from the Statement worth noting:
The overall message of the Statement is that during these extraordinary times disclosures to investors cannot be business as usual. Companies should look at disclosures through a fresh lens, being realistic about current circumstances and focusing on what can be expected going forward as best as it can be foreseen. Disclosures should be tailored to the particular circumstances of the company and the challenges it faces, being mindful of what management is focused on, what has been communicated to the board and its committees and what they collectively see as most important.
Your regular Locke Lord contact and any of the authors are available to assist you navigate through these challenging times.
Visit our COVID-19 Resource Center often for up-to-date information to help you stay informed of the legal issues related to COVID-19.
The post SEC Emphasizes Meaningful Disclosure Amid COVID-19 Uncertainties appeared first on Capital Markets.
Visit our Capital Markets Blog for the latest news and developments.Visit the blog
Sign up for our newsletter and get the latest to your inbox.