Hot Topic | April 2020



SEC stresses importance of disclosure during COVID-19

SEC urges companies to disclose as much information as practicable about the current and future effects of COVID-19.

As companies prepare periodic filings and associated earnings releases – and conduct analyst and investor calls – SEC Chairman Jay Clayton and Corp Fin Director Bill Hinman issued a joint public statement offering observations and requests in an effort to facilitate robust disclosures about the current and future effects of COVID-19.  


  • Public companies

Relevant dates

  • Effective immediately

Key impacts

Observations and requests emphasized by the Chairman and Director include (not exhaustive):

  • Efforts to mitigate the COVID-19 pandemic have caused a significant contraction of the economy, and increased volatility and uncertainty in our capital markets. 
  • The response strategy must evolve to effectively address the health risks of COVID-19 while also fostering a meaningful, responsible increase in economic activity. 
  • The execution of a response strategy will require constant coordination among everyone in this highly integrated economy – workers, consumers, businesses, governments, investors. 
  • Historical financial information may be less relevant, causing quarterly reporting to be out of sync with the usual routine. 
  • A company’s disclosures should provide as much information as practicable about its current state of affairs and future outlook, including:
    • Current operating and financial status, and strategy to assess, plan for and address the effects of COVID-19
    • Progress of its response efforts to COVID-19 
    • Potential impact to operations and financial condition as the efforts to fight COVID-19 progress.  
  • Examples of expanded discussions include (not exhaustive):
    • Income statement and balance sheet effects
    • Current liquidity position and expected financial resource needs
    • Impact of COVID-19 on operations
    • Company efforts and policies to protect the health and well-being of its workforce and customers
    • Receipt of financial assistance under the CARES Act or similar COVID-19 programs
    • Nature, amounts and effects of financial assistance to the extent it materially affects, or is reasonably likely to have a material effect on, the financial condition or operating results.
  • High quality information and transparency is necessary to enhance valuable communication and coordination of public and private sectors across the economy in the fight against COVID-19 – and will foster confidence between parties in countless types of transactions (e.g. between suppliers and manufacturers, between investors and businesses).  
  • Companies are encouraged to provide robust, forward-looking disclosures – and those that do may avail themselves of the safe-harbor rules for such statements.  
  • Given the uncertainty in the current business environment, good faith attempts to provide investors and other market participants appropriately framed forward-looking information would not be expected to be second guessed.

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