News Archives - Page 50 of 56

SEC Provides Conditional Relief and Assistance For Companies Affected By COVID-19

Posted on March 2020March 2020 by info

Filing Relief for Registrants Impacted by the Coronavirus

The SEC issued an exemptive order (the Order) on March 4, 2020 providing conditional relief for registrants that are impacted by the coronavirus (COVID-19) and are unable to file on a timely basis. The Order provides companies with an extension of the due date of 45 days to file certain SEC disclosure reports that would have been due between March 1 and April 30, 2020. If a registrant intends to take advantage of this relief, the filing must disclose why it was unable to file on a timely basis.

Additional steps must be taken to take advantage of the extension, including a requirement to furnish Form 8-K¹ by the later of March 16, 2020 or the original reporting deadline, which includes the following information:

A statement that the registrant is relying on the Order;
A brief description of the reasons why the registrant cannot file on a timely basis;
The estimated date the registrant expects to file;
If appropriate, a risk factor explaining the impact of the coronavirus on the registrant’s business (if material); and
If the reason the registrant is unable to file relates to a person other than the registrant, the Form 8-K must include an exhibit signed by that person containing the specific reasons why that person in unable to provide its opinion, report, certification, etc.

The due date for annual or quarterly reports for companies that receive an extension pursuant to the Order will be 45 days after the filing deadline for the report. Those companies will be permitted to rely on the grace period in Exchange Act Rule 12b-25 to receive additional time to file the report (fifteen calendar days for an annual report and five calendar days for a quarterly report). Companies that take advantage of the extension permitted by the Order or the grace period permitted by Rule 12b-25 will still be considered current and timely Exchange Act filers for purposes of Form S-3 and Form S-8 eligibility.

The Order also provides relief from the proxy and information statement delivery requirements for those delivering materials to the affected areas.

Further information can be found in the press release and exemptive order. Registrants are encouraged to contact the SEC staff within the Division of Corporation Finance² for any additional relief, assistance or other guidance.

Disclosure Reminders for Registrants Impacted by the Coronavirus

The SEC’s press release announcing the Order also reminded all companies of their disclosure obligations under the federal securities laws:

If a company has become aware of a coronavirus related risk that would be material to its investors, it should refrain from engaging in securities transactions with the public. Additionally, companies should take steps to prevent directors, officers, or other insiders from initiating such transactions until investors have been appropriately informed about the risk.
Companies should disseminate material information related to the impact of the coronavirus broadly and on a timely basis. Previous disclosures may need to be revisited or updated.
Companies providing forward-looking information or known trends and uncertainties regarding the coronavirus in an effort to keep investors informed can avail themselves of the safe harbor in Section 21E of the Exchange Act.

Personal Data Privacy During an Unprecedented Pandemic

Posted on March 2020March 2020 by info

Personal data is a complicated asset. The use of personal information for the provision of a service, research purposes, identity verification, and a countless array of other objectives that range from benign and boring, to potentially predatory and malicious, has become ubiquitous in modern society. Personal data is an extremely valuable tool; it is capable of being leveraged to inform decisions and policies, and reach such specific and targeted conclusions to complicated questions, that it borders on clairvoyance. As is often the case, there are two sides to this coin. Personal data also presents substantial risk, to the individuals to which that data pertains, and to the organizations using it, which now needs to operate under ever-increasing regulation. Governments and companies alike are rushing to leverage personal data to its utmost capacity and bring this pandemic to a speedy end, while still maintaining the privacy of the sick and vulnerable.

For a law aimed to increase the protection of personal information, it is perhaps surprising that there are provisions within the European Union’s General Data Protection Regulation (GDPR) that allows for the suspension of the rights and requirements of the legislation. Responding to the COVID-19 outbreak is the first instance in which these provisions have been exercised. To better equip itself to fight the spread of COVID-19, the EU is suspending GDPR and loosening restrictions on the processing of what the law calls “special categories” of personal information. These special categories were created to place firmer limitations on types of personal data that presented increased risk, such as race/ethnicity information, political affiliations, and sexual orientation. However, also within this group of special categories is health data. Privacy protections were put in place to benefit the public, but under current circumstances curtailing the access to, and use of valuable health data, it would work against that interest. As a result, France now allows the transfer of personal health data to “any partner involved in the control, prevention and evaluation of the epidemic, in particular the General Directorate of Health.” Italy has issued an ordinance permitting the processing of any personal health data “necessary for the performance of the civil protection function.” Even the U.S. Department of Health and Human Services has announced that there are multiple scenarios under which covered entities may share personal health information without an individual’s consent in order to combat the virus.

This loosening of reins, however, is not absolute. While it is completely reasonable to determine that such a public crisis requires more flexibility, the risks of processing personal data are still very much present and in need of mitigating. Even the ways in which suspensions are being made to the GDPR requirements seem to reflect this fact. Italy’s new ordinance is effective only until July, and France limits its new data sharing policies to “only the data strictly necessary for the accomplishment of the mission.” While some sharing of HIPAA protected health data within the United States may now be permissible under the cover of serving public health interests, it is still important to protect an individual’s privacy and only share such information to those with a legitimate need to know basis.

As individual enterprises look to their own practices to make decisions regarding COVID-19 and their employee’s personal data, risks will need to be evaluated; in terms of the potential harm to the individual, and the potential benefits to the enterprise and individual, arising from the release of information. As a result, there are items that should be on an enterprise’s checklist to help them weigh the balance:

Do not reveal the identities of individuals to the public or provide information that could accurately identify people who are under investigation for exposure to COVID-19.
Be prudent with your employees in sharing the latest CDC information regarding prevention and efforts by government and businesses in limiting exposure of people to COVID-19.
Use continued due diligence in collecting, using, and storing health information of employees. Publicizing of employees who have contracted the disease is counterproductive.
Assess your organization’s third-party relationships, including business and strategic partners, which might involve the transfer, sharing or release of employee data.
Ensure that proper authentication and authorization controls are in place to access sensitive information. How does the organization verify the identity of calls wishing to either access their health information or inquire about the status of its employees?
Assure your employees of the continued control posture that their data is maintained in the enterprise. Continue to educate employees regarding your organization’s privacy policy.
Continue with security efforts to monitor networks and access for anomalies, since others may think your attention is diverted to pandemic issues.

Data privacy regulations are still attempting to nail down the balance between extracting value from personal data and protecting the individuals that are the sources of such data. The managing of the COVID-19 outbreak by governments worldwide will represent the equivalent of case law, further fine-tuning our understanding of where and when to protect personal data, and where and when to leverage it.

Sources:

Coronavirus Strikes Nonprofits in More Ways than One

Posted on March 2020 by info

Now present on every continent except Antarctica, COVID-19 has infected more than 125,000 people, and is responsible for more than 4,600 deaths. With the number of cases in the U.S. continuing to climb, individuals and companies alike are taking steps to prepare for a pandemic. From a shortage of masks and hand sanitizer, to CDC-imposed travel restrictions and the cancellation of conferences and other large events across the globe, this public health emergency is rapidly evolving and all sectors are having to navigate its impact and uncertainty around what the future holds.

The nonprofit industry is no exception—in fact, they face more challenges than most.

The raison d’tre of nonprofit organizations is to help make the world a better place by helping the most vulnerable sectors of the population. These constituencies are also likely to be the hardest hit by the virus. This situation indicates the importance of a healthy nonprofit sector. Many current nonprofit beneficiaries may need greater services and the number of individuals needing services will likely increase. The sector has always risen to the challenge and we don’t predict that changing.

As with previous crises, the nonprofit sector is poised to help pull the country through this latest challenge. Congress just allocated $8.6B in funding designated for coronavirus prevention, preparation and response efforts, and many nonprofits could stand to receive a portion of those funds.

At the same time, nonprofits also need to mitigate risk for their organization at large, whether that’s protecting employees or preparing for the potential financial fallout from the virus. This situation exposes the importance of resiliency in the nonprofit sector, and some organizations will be better positioned than others to manage this crisis.

While this situation is evolving daily, here are some of the key goals nonprofits should prioritize when considering their response to COVID-19.

Maintaining the Mission
Even during times of significant uncertainty, nonprofit organizations should be sure to keep their mission as the North Star guiding their response. The novel coronavirus is no exception. Many organizations may face interruptions to programming as a result of reduced travel and social distancing.

But that doesn’t mean that furthering your mission should take a backseat. Organizations should take a step back and put together a crisis management team, including executive leaders, investment advisors, communications and program staff to assess how to maintain as much normalcy as possible while limiting exposure risks to both their own employees and the constituencies they serve.

Technology can be a powerful tool to help organizations continue to deliver on their mission while limiting in-person gatherings and travel. We’ve already seen this, for example, with higher education institutions that are moving classes online. Organizations should consider bringing planned meetings and events online, or even postponing or cancelling them completely, along with office closures.

Remote work arrangements can also help organizations continue to operate as normally as possible. There is good reason to think that many nonprofits are leveraging the types of cloud-based platforms that support remote work. According to last year’s Nonprofit Standards Benchmarking Survey, 47% of organizations surveyed offer telecommuting options, and an additional 9% said they plan to in the next 1-2 years. However, the 44% of organizations that had no plans to offer telecommuting may want to consider updating their approach in light of the current situation. The reality is that some organizations may be hindered by their access to technology, or may have processes or functions that must be done in person. Those organizations should consider limiting on-site staff to only those that absolutely must be in the office.

Ultimately, regardless of the tactics a nonprofit employs, the goal should be to continue to deliver on your mission as much as possible under the current circumstances. Some nonprofits that serve vulnerable populations, for example the homeless or the elderly, may not have many options. Those that can, however, should leverage whatever tools they have available.

Safeguarding Finances
While disruption to programming and mission is important, nonprofits should also consider the potential financial fallout of the coronavirus. Many organizations in the social services space rely on physical attendance to continue to receive funding. Museums and zoos may be facing decreased ticket sales. Organizations with planned fundraising events or conferences could need to eat some of those costs if the events are not rescheduled, and “high touch” fundraising efforts may decline. Donations could also be impacted if the financial markets don’t rebound quickly. All of these forces could put nonprofits’ finances at risk.

If an organization faces financial threats that put its very existence in jeopardy, those who benefit from its mission and programming are in jeopardy as well. It’s important that organizations do whatever they can to ensure they stay financially healthy during this time of uncertainty. How organizations optimize and leverage existing revenue and reserves will be important measures of sustainability.

A key element of this is to maintain adequate liquidity, which has long been a challenge for organizations. Our benchmarking survey found that 63% of organizations have 6 months or less of operating reserves, meaning they could be at risk if this situation continues in the near term. Nonprofits should consider shoring up their reserves as much as possible in order to weather any funding delays that could be on the horizon. To do so, they should consider drawing on available lines of credit, and get in contact with lenders to ensure their credit lines are open should liquidity become an issue. Organizations should also reach out to investment advisors to discuss the liquidity available in their portfolios and how to adjust both long and short-term investment strategies if needed.

It’s also important that nonprofits communicate openly and honestly with funders, whether donors or grantmakers, about the financial challenges they may face in light of the COVID-19. Some news coverage has mentioned grant officers considering helping to cover the costs of cancelled nonprofit events. Having open conversations about your financial health can help ensure organizations are protected as much as possible.

Evolving the Approach
The spread of COVID-19 and the resulting ripple effects around the globe are happening at a rapid pace. What looks like an overreaction one day may be an appropriate response merely days later. Employees and volunteers are likely to continue to have questions about how an organization is minimizing their risk while seeking to maintain business as usual. This means that while nonprofits should look to established contingency plans, they may not be relevant for long.

Organizations should seek to evolve their response appropriately as this situation shifts over time. Pay close attention to what governments and health agencies recommend and try to follow their recommendations as much as possible. For organizations with international boots on the ground, seek to follow the measures being implemented in each of those countries.

Your organization’s leadership team should also be having regular, transparent conversations on what policies and procedures you’re putting in place. Consult with peer organizations collectively to discuss your plans to managing risk. Don’t be afraid to change your approach if the situation warrants it. It’s also important to maintain open lines of communication with employees to ensure you are hearing their concerns and factoring them into major decisions.

One of the major challenges of this situation is that no one knows for sure when concerns will abate. Regardless of what is to come, it’s critical that nonprofit organizations seek to balance furthering their mission with protecting their organizations.