So far, 2025 has proven to be challenging in many ways for public companies on the disclosure front, as we have navigated an evolving global trade policy, volatile financial markets and decidedly mixed signals on the future direction of the economy. Now, as the June 30 quarter-end date looms for many companies, we learned over the weekend of the U.S. strike on Iranian nuclear sites and we try to process what this could mean for the financial markets and the economy as companies begin preparing their quarterly reports.

The principal concerns now that the U.S. is involved in the conflict will be focused on retaliatory measures and how they could potentially escalate the situation and wreak havoc on the world economy. Over the course of this weekend, one of the potential retaliatory measures that was frequently discussed is a blockade of the Strait of Hormuz, which is a vital shipping lane for the world’s oil supply. This CNN article notes its strategic importance:

From the perspective of the global economy, there are few places as strategically important. The waterway, located between the Persian Gulf and the Gulf of Oman, is only 21 miles wide at its narrowest point. It’s the only way to ship crude from the oil-rich Persian Gulf to the rest of the world. Iran controls its northern side.

About 20 million barrels of oil, about one-fifth of daily global production, flow through the strait every day, according to the US Energy Information Administration (EIA), which called the channel a “critical oil chokepoint.”

A spike in oil prices as a result of a blockade of the Strait of Hormuz could serve to ignite inflationary pressures in the global economy already impacted by the evolving U.S. global trade policy, which could ultimately cause a negative impact on an already fragile U.S. economic outlook. As we discussed in the May-June 2025 issue of The Corporate Counsel, companies will need to carefully monitor and address (to the extent material) these risks and uncertainties. Key disclosure considerations include:

– Disclosure of known trends and uncertainties in the MD&A disclosure, including the impact of the unfolding trade policy changes, ongoing market volatility, inflationary pressures and potentially weakening economic conditions on a company’s results of operations and liquidity;

– Disclosure of geopolitical and economic risks in a company’s risk factors, to the extent not already covered by existing risk factor disclosure, while considering the need to avoid hypothetical risk factor disclosure;

– The impact of the uncertainty on the company’s earnings guidance or expectations, and whether it may be necessary for the company to pre-release earnings information closer to the end of the quarter or consider suspending guidance for the near term in light of all of the uncertainty;

– The need to address certain significant events in a Current Report on Form 8-K, including layoffs and other exit activities as well as impairments; and

– For companies facing significant business headwinds due to global trade and economic conditions, the need to consider whether the company can continue as a going concern in the near term.

As with the trade policy shock that took place during the last fiscal quarter, the geopolitical and economic implications of the U.S. strike in Iran will continue to unfold over the next days and weeks as quarterly disclosures are being prepared, so companies and their Disclosure Committees should closely monitor the developments and their potential disclosure implications.

– Dave Lynn