Companies Call on SEC’s Coronavirus Relief

With seemingly every business on the planet affected by the coronavirus pandemic, the Securities and Exchange Commission is taking steps to ease the regulatory burden on public companies.

The latest moves came on Friday. Given the suddenly problematic nature of in-person shareholder meetings, the Commission published guidance to help companies conduct their meetings virtually. The SEC offered “regulatory flexibility” to companies that opt to move the date and location of their meetings, including those moving them online, as Starbucks and others have done. The SEC also granted relief to investment funds and advisers from the need to conduct in-person board meetings and other filing and delivery requirements.

Previously, the SEC announced that it would extend deadlines by 45 days for companies unable to make financial disclosures due between March 1 and April 30 as a result of COVID-19. Companies that use the extension would need to specify in filings why or how the virus caused a delay in meeting the original deadline. The Commission also teamed with the Public Company Accounting Oversight Board (PCAOB) in February to implore companies to work with their audit committees to ensure their financial reporting and auditing activities remained “as robust as possible” during the outbreak.

A search of the Intelligize platform reveals that 20 companies have already taken advantage of the SEC’s 45-day extension. While most of the filings are coming from companies with headquarters within the United States, they illustrate the extent of globalization and the widespread effects of the virus—across industries and across continents. Hartford Great Health Corp., for instance, said in a Form 8-K dated March 13 that two of its subsidiaries in China were closed by order of local governments. As a result, the California-headquartered company said it would delay its quarterly financial report because it lacked current financial records to provide to its auditors and accountants.

In February, the SEC cautioned that the public health crisis could impact “financial disclosures and audit quality, including, for example, audit firm access to information and company personnel.” The filings bear out the agency’s concerns about travel restrictions and auditor firm access.

The virus’ outbreak in China featured prominently in extension filings. Shengshi Elevator International Holding Group Inc., which has its headquarters in China’s Guangdong Province, disclosed that the Chinese government shutdown prevented a timely on-site audit by its accountant, and the relief notice even exhibited a letter of audit progress. Glory Star New Media Group Holdings Limited said it is facing similar challenges, and it filed a statement from its independent registered public accounting firm as well.

Some companies cited travel restrictions as the reason for delaying filings, including Maryland-based food company Verus International, Inc. and U.S. oil and gas company MMEX Resources Corp. Meanwhile, the ongoing lockdown and quarantine imposed by the Italian government prevented Milan-based Kaleyra, Inc.’s third-parties from providing information to the auditor, and Canadian-HQ’d company Newgioco Group, Inc. could not send its auditors into Italy.

With government and public health officials warning that the fallout from COVID-19 is just beginning in the U.S., be on the lookout for companies to announce plans to call on the SEC’s coronavirus-related relief measures.

Disclosure regarding SEC Release No. 34-88318  filing deadline conditional regulatory relief:

• SHENGSHI ELEVATOR INTERNATIONAL HOLDING GROUP INC. FORM 8-K FILED 3/16/2020
• GLORY STAR NEW MEDIA GROUP HOLDINGS LTD FORM 8-K FILED 3/16/2020
• JIN WAN HONG INTERNATIONAL HOLDINGS LTD FORM 8-K FILED 3/16/2020
• SQN AIF IV, L.P. FORM 8-K FILED 3/16/2020
• KALEYRA, INC. FORM 8-K FILED 3/16/2020
• SQN ALTERNATIVE INVESTMENT FUND III, L.P. FORM 8-K FILED 3/16/2020
• ORIGINCLEAR, INC. FORM 8-K FILED 3/16/2020
• EXACTUS, INC. FORM 8-K/A FILED 3/17/2020
• BIOLIFE SOLUTIONS INC FORM 8-K FILED 3/16/2020
• IMAGEWARE SYSTEMS INC FORM 8-K FILED 3/16/2020
• A.H. BELO CORP FORM 8-K FILED 3/16/2020
• BRT APARTMENTS CORP. FORM 8-K FILED 3/16/2020
• MU GLOBAL HOLDING LTD FORM 8-K FILED 3/13/2020
• HARTFORD GREAT HEALTH CORP. FORM 8-K FILED 3/13/2020
• VERUS INTERNATIONAL, INC. FORM 8-K FILED 3/13/2020
• AMERICAN RESOURCES CORP FORM 8-K FILED 3/13/2020
• NATUR INTERNATIONAL CORP. FORM 8-K FILED 3/13/2020
• NEWGIOCO GROUP, INC. FORM 8-K FILED 3/12/2020
• MMEX RESOURCES CORP FORM 8-K FILED 3/12/2020
• XT ENERGY GROUP, INC. FORM 8-K FILED 3/11/2020