COVID-19: SEC announces new COVID-19 disclosure guidance

Three months after issuing its first formal COVID-19 disclosure guidance, the U.S. Securities and Exchange Commission (the “SEC”) staff has published additional guidance, CF Disclosure Guidance: Topic No. 9A (the “June Guidance”), asking companies to consider the effects of recent legislative relief, as well as their ability to continue as a going concern, when drafting their public disclosures.

Like CF Disclosure Guidance: Topic No. 9 (the “March Guidance”), the June Guidance provides an extensive list of questions for companies to consider when preparing operations, liquidity, and capital resources disclosures with respect to COVID-19-related business and market disruptions. While the March Guidance centered primarily on how companies anticipated COVID-19 would affect their financial conditions and results of operations, the queries contained in the June Guidance focus on companies’ performance after having spent several months contending with COVID-19. In addition, the June Guidance asks companies to consider the effects of any relief, including any conditions placed on such relief, that they have obtained under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. Finally, the June Guidance poses going concern-related questions, which the SEC’s chief accountant expands upon in a statement released the same day as the June Guidance.

The June Guidance comes not long after a group that includes a number of institutional investors and state treasurers sent the SEC a letter urging the creation of new disclosure requirements that would allow investors to analyze how companies are acting to protect workers, prevent the spread of the COVID-19, and use any federal aid provided to them. However, the SEC’s guidance does not address many points raised in the letter, including proposals that companies disclose: the rationale for any material modifications of senior executive compensation due to the COVID-19 pandemic; whether or not they provide paid sick leave; whether part-time and contract employees receive the same benefits as full-time employees; workers’ right policies; and election spending and lobbying activities.

Read our full alert, including a list of non-exhaustive list of questions that companies should consider when drafting their disclosure, here