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On May 14, 2020, the Securities and Exchange Commission (SEC) approved the request by the Nasdaq Stock Market (NASDAQ) to delay until September 1, 2020, the implementation of a recently adopted rule that will accelerate the delisting process for listed companies (i) with securities in a minimum bid price compliance period (as described below) with bid prices at or below $0.10 or (ii) that have fallen below the minimum bid price after completing one or more reverse stock splits with a ratio of 250 shares (or more) to one over the prior two years.

NASDAQ’s continued listing rules require that a company’s listed equity securities maintain a minimum closing bid price of at least $1.00 per share. A NASDAQ-listed company is noncompliant with this listing standard when the bid price for its listed security closes below $1.00 for 30 consecutive business days. Generally, after becoming noncompliant, a NASDAQ-listed company has a period during which it can regain compliance.[1]…

Continue Reading Update: NASDAQ Temporarily Delays Implementation of Accelerated Delisting Rules During COVID-19 Pandemic

On May 4, 2020, the Securities and Exchange Commission (“SEC”) issued four frequently asked questions and related responses (“FAQs”) regarding the COVID-19 Order (the SEC’s Order issued on March 25, 2020 (Release No. 34-88465 available here), which as we previously reported here, gave public companies a 45-day extension to file certain periodic reports otherwise due between March 1 and July 1, 2020, subject to specified conditions). The FAQs address the impact of the COVID-19 Order in certain situations, specifically the disclosure required in order to take advantage of the extended filing deadline relief and the use of Form S-3 when taking advantage of such relief.

The FAQs provided by the SEC can be found here.

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Continue Reading SEC Issues FAQs Regarding COVID-19 Order

On May 4, 2020, the Securities and Exchange Commission (SEC) approved the Nasdaq Stock Market’s (NASDAQ) request to temporarily modify certain shareholder approval requirements during the COVID-19 pandemic to make it easier for NASDAQ-listed companies to access capital.

As we previously reported here, in April, the New York Stock Exchange similarly adopted temporary modifications to certain of its shareholder approval requirements.

To address the capital needs of its listed companies, NASDAQ has adopted a temporary exception to the shareholder approval requirements for 20% issuances.

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Continue Reading Update: NASDAQ Provides Temporary Relief from Certain Shareholder Approval Requirements During COVID-19 Pandemic

The Securities and Exchange Commission (SEC) recently approved the temporary relief proposed by both the Nasdaq Stock Market (NASDAQ) and the New York Stock Exchange (NYSE) relating to compliance with the minimum price and minimum market capitalization continued listing standards of each exchange. In short, the cure period for regaining compliance with these standards is tolled through June 30, 2020. Listed companies that either (1) were in a cure period at the time the temporary relief took effect or (2) receive a notice of noncompliance after the temporary relief took effect and, in either case, have not regained compliance by June 30, 2020, will have their cure period either restart or begin on July 1, 2020. However, note that listed companies that receive a notice of noncompliance during the relevant toll period will still have to issue a press release, file a Form 8-K with the SEC, and, for NYSE-listed companies, submit a compliance plan to the NYSE.

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Continue Reading Update: NYSE and NASDAQ Receive Approval for Additional Temporary Relief from Continued Listing Standards During COVID-19 Pandemic

On April 6, 2020, the Securities and Exchange Commission (SEC) provided a compliance and disclosure interpretation (C&DI) extending relief provided in its prior COVID-19 order to the filing of required Part III information in a public company’s Form 10-K.

In addition, on April 6, 2020, Delaware’s governor, John C. Carney, signed a modification to Delaware’s state of emergency in response to the COVID-19 public health crisis allowing Delaware public companies that have sent a notice of annual meeting to change the meeting’s location by providing notice of the change in a press release, including posting to its website, and through its SEC filings, rather than sending a new written notice.

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Continue Reading Update: SEC Extends Filing Extension Relief to Form 10-K Part III Information; Delaware’s Governor Issues Revised Emergency Order Permitting Change in Annual Meeting Location Without Additional Mailing

New Rules Could Help Companies That Have Registered or Are Considering Registering Guaranteed or Collateralized Debt Securities

On March 2, 2020, the Securities and Exchange Commission (SEC) adopted certain rule amendments to simplify and modernize the financial disclosure requirements for registered offerings of guaranteed and collateralized debt securities, in an attempt to relieve some of the cost and burden of compliance. The current Rule 3-10 of Regulation S-X (which governs when a filing must include financial statements for a subsidiary that either issues securities guaranteed by the parent or guarantees the parent’s securities) and Rule 3-16 of Regulation S-X (which governs when separate financial statements are required for an affiliate whose securities collateralize the registrant’s debt securities) are burdensome and have caused many companies to use exemptions from registration (typically Rule 144A) when offering guaranteed or collateralized securities. The SEC provides in its press release that the “changes are intended to both improve the quality of disclosure and increase the likelihood that issuers will conduct debt offerings on a registered basis.” These amendments may cause issuers of guaranteed or collateralized debt securities to re-evaluate whether to pursue a registered offering when accessing the capital markets and will provide some relief to certain existing registered debt issuers.…

Continue Reading SEC Simplifies Disclosure Requirements for Certain Registered Debt Offerings

SEC Chairman’s Public Statements

On April 2, 2020, Securities and Exchange Commission (SEC) Chairman Jay Clayton issued public statements available here and here encouraging public companies to provide material information to investors as soon as practicable. The SEC chairman stated, “Our investors and our markets thirst for information as a general matter. This is particularly the case in times of economic shock and uncertainty. Couple this fundamental premise with the reality that for COVID-19-related reasons issuers may not be able to file required quarter-end reports on time, and we have a challenge.” He went on to remind companies that “an inability to file required reports does not prevent issuers from issuing earnings releases and filing current reports on Forms 8-K.”

SEC Chief Accountant’s Public Statement

On April 3, 2020, SEC Chief Accountant Sagar Teotia issued a public statement emphasizing the importance of high-quality financial reporting in light of the significant impacts of COVID-19, available here. He stated, “We recognize that the accounting and financial reporting implications of COVID-19 may require companies to make significant judgments and estimates. Certain judgments and estimates can be challenging in an environment of uncertainty. As we have stated for a number of years, [the Office of the Chief Accountant] has consistently not objected to well-reasoned judgments that entities have made, and we will continue to apply this perspective.”…

Continue Reading SEC Chairman Encourages Public Companies to Keep Investors Informed, SEC Chief Accountant Discusses COVID-19 Challenges