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On The Horizon: SEC regulatory relief and assistance for hurricane victims announced

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Contents SEC

Regulatory relief and assistance for hurricane victims announced
CorpFin adds Cross-Border Exemptions C&DIs

IASB amends the definition of a ‘business’ FASB

PCC posts recap of Oct. 9 meeting



SEC Regulatory relief and assistance for hurricane victims announced On Oct. 16, the SEC issued an Order to provide regulatory relief and assistance to a broad class of companies and others affected by Hurricane Michael. The Order conditionally exempts affected companies and others for periods of time following the hurricane from certain requirements of the federal securities laws, including Exchange Act filing requirements; proxy and information statement delivery requirements; Investment Company Act of 1940 delivery requirements for annual and semiannual reports of registered investment companies; transfer agent compliance with certain Exchange Act sections and rules; Exchange Act filing requirements for registered municipal advisors’ annual update to Form MA; and certain limited auditor independence requirements.

Those affected by the hurricane who require additional or different assistance in their efforts to comply with the requirements of the federal securities laws are encouraged to contact the Commission staff directly for individual relief or interpretive guidance.

Exchange Act filing deadlines

For registrants affected by the hurricane that are subject to the reporting requirements of Exchange Act Section 13(a) or 15(d), deadlines for materials filed or furnished under certain sections and rules of the Exchange Act have been extended for the period from and including Oct. 10, 2018, to Nov. 21, 2018; and all reports, schedules or forms must be filed on or before Nov. 23, 2018. Each report, schedule or form must be filed on or before the specified date; must disclose reliance on the Order; and must specify the reasons why, in good faith, the filing is delayed.

Auditor independence

In addition, the SEC provides a limited exemption from the auditor independence requirements of Exchange Act Section 10A(g)(1) and Regulation S-X, Rule 2-01(c)(4)(i), in connection with bookkeeping or other services relating to the accounting records of an audit client. The Order allows an auditor to assist its audit clients in the reconstruction of previously existing accounting records that were lost or destroyed as a result of the hurricane, provided that these services are pre-approved by the audit committee and cease as soon as all of the following three conditions are met:

  • The lost or destroyed records are reconstructed
  • The financial systems are fully operational
  • The client effects an orderly and efficient transition to management or other service provider

Other reporting requirements

In connection with the relief discussed above, the Commission announced positions that its staff will take under the Exchange Act, the Securities Act, and the Investment Advisers Act for purposes of determining whether a reporting company has satisfied certain reporting requirements, including the following positions:

  • For purposes of eligibility to use Forms S-3 and S-8, well-known seasoned issuer status, and the eligibility requirements of Rule 144(c), a company relying on the Order will be considered current and timely in its Exchange Act reports during the applicable relief period if it was current and timely as of the first day of the applicable relief period. After the applicable relief period, a company will continue to be considered current and timely if it files any required report for which it relies on the Order on or before Nov. 23, 2018.
  • Companies that receive an extension pursuant to the Order on filing quarterly or annual Exchange Act reports will be considered to have a due date of Nov. 23, 2018, and companies are permitted to rely on Exchange Act Rule 12b-25, Notification of inability to timely file all or any required portion of a Form 10-K, 20-F, 11-K, N-SAR, N-CSR, 10-Q, or 10-D, when they are unable to file the required reports on or before the due date.

In addition, the Commission staff will take the following positions when certain conditions and timelines are met:

  • A registered open-end investment company and a registered unit investment trust will have satisfied its prospectus delivery requirements.
  • A registered investment adviser will have satisfied Form ADV filing requirements.
  • A registered investment adviser will have satisfied the requirement to deliver written disclosure statements to its advisory client.

Regulation Crowdfunding and Regulation A relief

The SEC has also adopted Interim Final Temporary Rule, Regulation Crowdfunding and Regulation A Relief and Assistance for Victims of Hurricane Michael. The Rule specifies the time period for relief for specified reports and forms due pursuant to Regulation Crowdfunding and Regulation A for companies affected by the hurricane.

For reports and forms due during the period from and including Oct. 10, 2018, to and including Nov. 21, 2018, the report or form must be filed on or before Nov. 23, 2018; must disclose that the company is relying on the Interim Final Temporary Rule; and must include the reasons why, in good faith, the filing is delayed.

CorpFin adds Cross-Border Exemptions C&DIs The Compliance and Disclosure Interpretations described below reflect the views of the SEC staff. They are not rules, regulations, or statements of the SEC and have not been approved by the Commission. The interpretations are intended as general guidance and should not be relied on as definitive.

The SEC’s Division of Corporation Finance (CorpFin) staff recently added Compliance and Disclosure Interpretations (C&DIs), Cross-Border Exemptions, which replace previous interpretations published in Section II of the July 2001 Interim Supplement to Publicly Available Telephone Interpretations. The C&DIs reflect changes to certain previous positions as well as provide new interpretive guidance on certain matters. These changes and additions to Telephone Interpretations are outlined in the introductory section of the C&DIs.



IASB amends the definition of a ‘business’ The IASB has issued Definition of a Business (Amendments to IFRS 3), which amends IFRS 3, Business Combinations, to improve the definition of a “business” when determining whether an acquisition comprises a business or a group of assets. This determination is important to stakeholders because an acquirer recognizes goodwill only when acquiring a business.

The amendments define a “business” as “An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing goods or services to customers, generating investment income (such as dividends or interest) or generating other income from ordinary activities” (italicized portions are amended). Under the existing guidance, the italicized text is stated as “a return in the form of dividends, lower costs or other economic benefits to investors or other owners, members or participants.”

The amendments also

  • Clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs
  • Remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs
  • Add guidance and illustrative examples to help entities assess whether a substantive process has been acquired
  • Narrow the definitions of a business (as described above) and outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs
  • Add an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business

These amendments now bring the determination of whether an acquisition comprises a business or a group of assets closer to how this determination is made under the FASB’s guidance in ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business.   

Entities are required to apply the amendments to acquisitions that occur on or after Jan. 1, 2020. Earlier application is encouraged.



FASBPCC posts recap of Oct. 9 meeting The PCC reaches official positions only after extensive due process and deliberations. The PCC’s consensuses and consensuses-for-exposure are subject to ratification by the FASB.

The Private Company Council (PCC) has posted a recap of its Oct. 9 meeting.

The next PCC meeting will be held on Dec. 11.



© 2018 Grant Thornton LLP, U.S. member firm of Grant Thornton International Ltd. All rights reserved. This Grant Thornton LLP On the Horizon provides information and comments on current accounting and SEC reporting issues and developments. It is not a comprehensive analysis of the subject matter covered and is not intended to provide accounting or other advice or guidance with respect to the matters addressed in this publication. All relevant facts and circumstances, including the pertinent authoritative literature, need to be considered to arrive at conclusions that comply with matters addressed in this publication. For additional information on topics covered in this publication, contact a Grant Thornton client-service partner.