The safety of our staff, clients and their families is the top priority amid the coronavirus. During this time, we are offering flexibility to our staff to work from home if they are able to do so. We are also shipping thousands of supplies to our staff in China. For our staff who can work remotely, we are conducting trainings intended to keep skills sharp.
For clients who are planning to go public, it's important to note that the Securities and Exchange Commission (SEC) today issued a release regarding their close evaluation of the impact of the coronavirus on investors and capital markets:
Recognizing the impact of the virus on providing information to trading markets, shareholders and the SEC, "the Commission issued an order, that, subject to certain conditions, provides publicly traded companies with an additional 45 days to file certain disclosure reports that would otherwise have been due March 1 and April 30, 2020." Additionally, the SEC Chairman Jay Clayton said, “I urge companies to work with their audit committees and auditors to ensure that their financial reporting, auditing and review processes are as robust as practicable in light of the circumstances in meeting the applicable requirements.”
MarcumBP is actively focused on ensuring SEC compliance and producing reliable disclosure reports. For companies with accounting technology in place, we are able to share information and continue virtual work. Fieldwork is postponed until travel restrictions are lifted. Once possible, we look forward to visiting our clients in-person.
At this stage, companies who were planning to go public in 2020 still have a chance and a need to do so. One business side effect of the virus is sluggish sales and a delay in attracting investors, which could cause an increasing need for capital. Even companies that were not initially planning for an IPO in 2020 or 2021 may now initiate plans given the need for capital and shifts in the business environment.
Amid and in the aftermath of a crisis, it is important to maintain investor confidence and trust. The SEC recently suggested investors increase their scrutiny of Chinese companies given the current holding pattern. That said, it is critical for Chinese companies to engage early and often with their investors and produce reliable financials. The key is to approach the IPO process in a diligent and transparent matter.
In summary, MarcumBP is advising clients prepare in the following ways:
- Assess your limitations and identify ways to work around them.
- If at all possible, file your annual report (either form 20-F or 10-K) in a timely manner. If it takes additional resources or overtime, strive to do it. If you do not have the capacity to file in a timely manner, start to inform the investors of your situation.
- Communicate early and often to investors to retain trust and confidence. Get out in front of any bad news or changes - including revised earnings guidance.
- Look at your internal operations and make sure you have reasonable timelines to comply with all regulations, and the staff to do it.
- Leverage technology to share information with U.S. investors. Companies with more advanced internal control systems and accounting technology are faring better during times of crisis.
- Evaluate corporate governance structures and areas of improvement.
- Conduct internal staff trainings however possible - via webcasts for remote workers.
We hope this helps provide a sense of guidance for how companies can prepare for their IPO plans and resume a level of business activity. Above all else, the safety and well-being of our clients and our staff is the top concern. Please feel free to contact any member of the MarcumBP team if you need any assistance.