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SEC Insights - September 2018

 

SEC Provides Regulatory Relief to Public Companies Affected by Hurricane Florence

Contributor: John Rushford, Partner, Assurance Services

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The Securities and Exchange Commission announced on September 19, 2018, that relief would be extended to public companies and individuals directly or indirectly affected by Hurricane Florence and its aftermath.

The SEC acknowledged that the lack of communication, transportation, electricity, facilities, available staff and professional advisors could hamper the efforts of public companies and other persons with filing obligations meet their filing deadlines. Accordingly, eligible registrants subject to Exchange Act filing deadlines would be provided certain relief. The relief would include and stipulates that any report schedule or form required to be filed for the period September 14, 2018, to October 26, 2018, must be filed on or before October 29, 2018. In order to be eligible for this relief, the registrant must be unable to meet a filing deadline due to Hurricane Florence and its aftermath. The registrant must also disclose in the filing that it is relying upon this relief and state the reasons why it could not file such report in a timely manner.

The relief also includes registrants that are required to furnish proxy statements as well as annual and semi-annual reports to investors, provided that mail service to the mailing address of the registrant’s security holder was suspended as a result of the hurricane. There is also relief for certain transfer agent obligations, provided that the agent is unable to comply with the applicable rules due to the hurricane.

The SEC also acknowledged that, during this particularly challenging situation, a registrant may look to its auditor for assistance in reconstructing its accounting records from destroyed property and/or lost corporate records. Under the Exchange Act rules, auditors are prohibited from providing bookkeeping or other services relating to the accounting records of the audit client. Accordingly, limited relief from these prohibitions has been granted in areas affected by Hurricane Florence. The relief provided for services performed by the auditor are limited to reconstruction of previously existing accounting records, and the auditors’ services must cease as soon as the records are reconstructed and the registrant is able to transition these services back to management or other service providers. These services provided by the auditor are subject to pre-approval by the registrant’s Audit Committee.

While the SEC believes that the relief from these filing requirements is necessary and appropriate, registrants and others are reminded to continue their obligations to make accurate and complete disclosures in accordance with the anti-fraud provisions of the federal securities law. The SEC has encouraged companies to contact Commission staff if they require additional or different assistance in their efforts to comply with the applicable requirements.

 
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