The ISA Eases Obligations for Reporting Companies
On March 16, 2020, the Israel Securities Authority revised its previous position and announced that in light of the exceptional circumstances, reporting corporations may submit their 2019 periodic reports until April 30, 2020 (and not until March 31, 2020, as usually required).
According to the updated announcement, a reporting corporation that chooses to adopt said extension will be required to publish an immediate report on the date of such decision or by March 31, whichever is earlier.
This is an update to the previous announcement on March 8, 2020, on the conduct and disclosures required of corporations that report to the Tel Aviv Stock Exchange on the impact of the coronavirus on their business.
The previous announcement stated, among other things, that reporting corporations must publish the periodic report in a timely manner. While this has changed, it should be noted that all the other guidelines regarding the conduct and disclosures required of corporations that report to the Tel Aviv Stock Exchange remain the same.
Thus, any corporation whose business activity is materially impacted or may be materially impacted by the coronavirus must ensure this is properly disclosed to investors. This must be done through the following means: (a) publishing an immediate report, (b) providing a disclosure as part of the board of directors’ explanation in periodical reports, and (c) estimating the scope of the impact of the events both qualitatively and quantitatively.
The ISA emphasized that reporting corporations must present information on the impact of the virus in a clear, detailed, non-selective manner, thereby enabling investors to assess the impact optimally and sensibly.
In addition, reporting corporations must ensure they are able to continue to publish reports for the market in a timely manner, as required by law.
The ISA’s updated policy on providing time to reporting corporations to publish the periodic report is consistent with the policy of the SEC, issued several days earlier, allowing relief on reporting dates to US publicly traded companies impacted by the virus. Under the SEC order, subject to certain conditions, US publicly traded companies impacted by the virus will receive a 45-day extension in submitting the reports they are required to publish during the period between early March and the end of April 2020. These include, inter alia, the expanded annual reports and summons to shareholders’ meetings.
However, it should be noted that even the SEC, like the ISA, emphasized the importance of providing to investors full disclosure on the impact of the virus on the activity of US publicly traded companies, in a detailed and non-selective manner.
In this regard, it seems undisputed the ISA did right in its decision to adopt a policy similar to that of the SEC, and to state that reporting corporations should disclose the impact of the virus in order to allow the public to evaluate that impact optimally. The ISA also did right by updating its original policy and allowing reporting corporations to postpone submission of the periodic report until the end of April as a result of the exceptional circumstances caused by the virus.