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Yesterday, Corp Fin issued a new CDI addressing the application of the SEC’s conditional exemptive order extending by up to 45 days the due date for SEC filings by companies affected by the Covid-19 crisis to Part III of Form 10-K. Companies often incorporate Part III information into Form 10-K by reference to their definitive proxy materials. In order to do that, companies have file those definitive proxy materials within 120 days of their fiscal year end. If they can’t make that deadline, they need to amend their Form 10-K to include the Part III information.

How do the rules surrounding the inclusion of Part III information work for companies that want to rely on the SEC’s exemptive order? That’s the issue that the new Exchange Act Forms CDI #104.18 addresses:

Question: Form 10-K allows Part III information to be incorporated by reference from a registrant’s definitive proxy or information statement, or, under certain circumstances, filed as an amendment to the Form 10-K, not later than 120 days after the end of the related fiscal year. May a registrant that is unable to file the Part III information by the 120-day deadline avail itself of the relief provided by the COVID-19 Order (Release No. 34-88465 (March 25, 2020)) for the filing of the Part III information?

Answer: Yes, as long as the 120-day deadline falls within the relief period specified in the Order and the registrant meets the conditions of the Order.

– A registrant that timely filed its annual report on Form 10-K without relying on the COVID-19 Order should furnish a Form 8-K with the disclosures required in the Order by the 120-day deadline. The registrant would then need to provide the Part III information within 45 days of the 120-day deadline by including it in a Form 10-K/A or definitive proxy or information statement.

– A registrant may invoke the COVID-19 Order with respect to both the Form 10-K and the Part III information by furnishing a single Form 8-K by the original deadline for the Form 10-K that provides the disclosures required by the Order, indicates that the registrant will incorporate the Part III information by reference and provides the estimated date by which the Part III information will be filed. The Part III information must then be filed no later than 45 days following the 120-day deadline.

– A registrant that properly invoked the COVID-19 Order with respect to its Form 10-K by furnishing a Form 8-K but was silent on its ability to timely file Part III information may (1) include the Part III information in its Form 10-K filed within 45 days of the original Form 10-K deadline, or (2) furnish a second Form 8-K with the disclosures required in the Order by the original 120-day deadline and then file the Part III information no later than 45 days following the 120-day deadline by including it in a Form 10-K/A or definitive proxy or information statement. [April 6, 2020]

The CDI’s bottom line appears to be that, while the hoops that particular companies have to jump through may vary, companies taking advantage of the extension will be able to apply it to the Part III deadline as well.

Virtual Meetings: Delaware Gov.’s Order Resolves Notice Issues

Due to ambiguities in statutory language, companies switching from physical to virtual annual meetings have been uncertain about whether merely following the SEC’s guidance on communicating the change would be sufficient under state corporate law, or whether a new mail or email notice was necessary.  Yesterday, Delaware Gov. John Carney issued an order in effect providing that compliance by a public company with the SEC’s guidance would be regarded as sufficient notice under Delaware law:

If, as a result of the public health threat caused by the COVID-19 pandemic or the COVID-19 outbreak in the United States, the board of directors wishes to change a meeting currently noticed for a physical location to a meeting conducted solely by remote communication, it may notify stockholders of the change solely by a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to § 13, § 14 or § 15(d) of such Act and a press release, which shall be promptly posted on the corporation’s website after release;

The order provides a similar accommodation for adjournment of meetings originally scheduled for a physical location. Hat-tip to @DougChia for flagging the order yesterday evening.

Virtual Meetings: California’s Gov. Gives Temporary Sign-Off – But Is It Legal?

Late last month, Gov. Gavin Newsom signed an order providing similar relief for California companies. The order temporarily exempts California-charted companies from the need to obtain consent from all shareholders to a virtual meeting, and also eases notice requirements for companies that switch from physical to virtual meetings.

However, this recent blog from Keith Bishop suggests that there’s some uncertainty about whether the Gov. has the authority to issue such an order:

The fly in the ointment (see Ecclesiastes 10:1) is that the Governor may not have the statutory authority to suspend these requirements. As I pointed out in this post, the Emergency Services Act gives the Governor the authority to suspend only two types of statutes: “regulatory statutes” or “statutes prescribing the procedure for the conduct of state business”. “Regulatory statute” is not defined and no one can say with certitude that the statutes purportedly suspended by the Governor are regulatory statutes.

As a result, Keith says that corporations opt for virtual only meetings based on the Governor’s order will be assuming some risk that actions taken at those meetings may be later invalidated. He suggests that lawyers may need to take that into account if asked to render “due authorization” opinions for actions taken at those meetings,

– John Jenkins