Public Company Continuous Disclosure Obligations - How Did They Arise?
Section 13(a) of the ‘34 Act, Rule 13a-11(a) requires companies to:
keep reasonably current
the information and documents required to be filed in or with
an application or registration statement
Section 409 of the Sarbanes-Oxley Act of 2002 requires companies to:
disclose to the public
on a rapid and current basis
such additional information concerning material changes in the financial condition or operations of the issuer
Due Within Four Business Days, What Are the Four Exceptions?
Most 8-Ks due within 4 BDs
after the occurrence of a reportable event (and there are various 8-K triggering events)
Exceptions:
- Annual meeting voting results - day one is the meeting date (Instruction 1 to Item 5.07: “four business day period for reporting the event … shall begin to run on the day on which the meeting ended”)
- Appointments of certain officers - can delay until the date of the public announcement
- Decision on “say when on pay”
- 7.01 and 8.01 that are voluntary and discretionary
What is the Filing Deadline?
Filings can be made
on the SEC’s EDGAR filing system
starting at 6:00 am ET
and must occur by 5:30 pm ET in order to be considered filed on the date submitted
What Happens if 8-K is Late?
Can have serious repercussions,
most significantly loss of Form S-3 eligibility for one year after the Form 8-K is then-filed
so if they’re planning to do a debt or equity offering, required to use long form S-1 full prospectus
can be quite expensive and costly to the client
Also causes a legal opinion issue for outside firms that have given an opinion regarding the form used
Also potential 10b-6 liability, however, there is a limited safe harbor only until the due date of the next 10-Q or 10-K under Section 10(b) of the ‘34 Act and Rule 10b-5.
Under Rule 144, “current public information” requirement does not apply to 8-Ks
however, cannot be in possession of MNPI not yet disclosed due to late Form 8-K
Loss of S-3 Eligibility Exceptions?
- entry/termination of material agreements; mine safety (1.01, 1.02 and 1,04)
- Results of operations and financial condition (2.02)
- Financial obligations, exit costs, material impairments (2.03, 2.04, 2.05, 2.06)
- Non-reliance on financials (4.02(a))
- NEO compensation arrangements (5.02(e))
