Impacts of COVID-19 on Late Filings

Between fiscal years ended 2015 and 2018, public companies had been improving their ability to deliver timely information; there were 851 late filings issued for fiscal year 2015 and just 638 for fiscal year 2018. However, this trend was reversed for fiscal year ended 2019 due to the impacts of COVID-19.

The timeliness of annual reports with fiscal years ending on or about December 31 have remained consistent since 2015. The median number of days to issue these annual reports was between 70 and 72 days for fiscal years 2015 through 2018. The median number of days to issue annual reports for fiscal year 2019 is currently 65 days, though this number is expected to increase once late annual reports are issued.

We’ve also observed that the number of late annual filings has been declining since 2015. The decline in late annual filings has mirrored the decline in annual reports, with the exception of 2019. However, fiscal year ending 2019 has seen a much larger decline due to the SEC order granting companies impacted by COVID-19 an additional 45 days, instead of 15 days. Most companies that have taken advantage of the SEC relief did not issue a Form NT.

On Wednesday, March 4, 2020, the SEC announced that it was providing conditional regulatory relief for public companies facing challenges from the impact of the coronavirus/COVID-19 pandemic. The regulatory body issued an order that provides these affected companies with an additional 45 days to file certain disclosure reports that would otherwise have been due between March 1 and April 30, 2020.

Shortly after, on Wednesday, March 25, 2020, the SEC announced that it was extending the filing periods covered by its previously enacted regulatory relief for certain public company filing obligations. The updated aid provides companies (meeting specific criteria) with a 45-day extension to file certain disclosure reports that would have otherwise been due between March 1 and July 1, 2020. For most companies, this extension delays filings for the first two quarters of 2020.

Most SEC relief disclosures have been for annual reports, which comes as no surprise considering most companies have a calendar year end and the deadline for first quarter reports has not passed. Other information that was delayed includes quarterly financial information, ownership information in proxy statements and amended 10-Ks, and super 8-Ks in connection with mergers and acquisitions.

Also, as one might expect, the location of a company’s headquarters has a major impact on whether a company has taken advantage of the SEC relief.

Most companies that took advantage of the relief were small. This was partially because the relief was not available until March 1, 2020, and large accelerated filers – those with public float of $700 million or more – were required to issue financial statements by February 29.

Late annual filings were at their highest point for fiscal years ending in 2019 since 2015 – when including both Form NT late filings and SEC relief late filings.

When including delayed filings that have used the SEC relief, almost two-thirds of fiscal year end 2019 annual reports remain outstanding. Based on the previous four years, we expect that 10% of delayed annual reports are never issued; this would result in 80 annual reports never being issued for fiscal year end 2019 and roughly 420 annual reports being issued in the future. This is expected to increase the median number of days to file an annual report – a new high for 2019.

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