Curing Delinquent Securities Filings: The Super 10-K

During the aftermath of the great recession, many companies have become delinquent in their periodic quarterly ("10-Q") and annual ("10-K") securities filings because they could not raise enough capital to pay the multitude of professionals involved with their public company reporting. As many commentators have noted, the Securities and Exchange Commission ("SEC") generally requires later filers to cure individual 10-Q's and 10-K's.

A delinquent filer can simply file all of the required Forms 10-Q and Forms 10-K and become current. However, this usually demands extraordinary fees and effort, particularly on the audit side.

Consequently, the SEC has established a method by which delinquent filers can request permission from the SEC's Office of Chief Accountant at the Division of Corporation Finance to combine several periods of Forms 10-Q and Forms 10-K into one report, commonly known as a "Super 10-K."

The SEC gives guidance regarding an accommodation request in Section 1320.4 of the Division of Corporation Finance's Financial Reporting Manual.

1320.4 Delinquent Filers Not Operating Under the Bankruptcy Laws

  1. A delinquent filer may request an accommodation to file a comprehensive annual report on Form 10-K by writing to CF-OCA. If before the request, however, the filer had been notified in writing about its delinquency, CF-OCA generally will deny the accommodation request.
  2. If granted, the accommodation would allow the filing of a comprehensive Form 10-K to include all audited financial statements and other material information that would have been available had the registrant filed timely and complete reports. This comprehensive report also will be required to include unaudited quarterly financial statements in a level of detail consistent with S-X 10-01(a) and (b) for at least the same quarters required by S-K 302(a)(1) as well as a discussion of operating results, trends, and liquidity for each interim and annual period.
  3. The granting of this reporting accommodation would not constitute a waiver of the registrant's duty under the Exchange Act to file all delinquent reports nor would it foreclose enforcement action as to the registrant's filing delinquencies.
  4. The mere filing of a comprehensive annual report would not result in the registrant being considered "current" for purposes of Regulation S, Rule 144, or Form S-8 registration statements. Also, the registrant would not be eligible for Form S-3 level disclosures until it establishes a sufficient history of making timely filings. Registrants having questions on this matter should contact OCC.

Note that a "Super 10-K" does not cause the reporting company to be considered "current" for Rule 144 purposes until it has a sufficient track record of timely filings (a highly fact-intensive determination). A Super 10-K will ensure that the SEC does not suspend the reporting company's stock under Section 12(k) of the Exchange Act (which can happen even in the over-the-counter markets) and also can help a reporting company become more attractive to lenders.

In general, a request to the SEC to file a Super 10-K should be written by competent legal counsel and should contain at the very minimum the following information:

  • A description of all delinquent securities filings and periodic reports;
  • Reasons for the delinquency;
  • Explanations as to how the reporting company will realistically resume reporting;
  • Requests that the SEC staff not object to the filing of the Super 10-K in lieu of all individual delinquent reports;
  • A plan of the reporting company's ability (including a calendar of actions to be completed by the reporting company and its auditors) to complete the Super 10-K, including the date the filing will be made;
  • Details of any information that will not be included in the report that otherwise would be required and the reason for the exclusion (for example, lost or destroyed records, death or incapacity of an executive, an eviction or other event that deprives the Company of their records, etc.); and
  • Declarations of intent to timely file all future periodic reports.

The Super 10-K should describe the current state of the Company's business rather than provide a description as of the date the delinquent reports were due and generally will include additional risk factors (e.g., weakness in internal control over financial reporting, inability to obtain financing, inability to register securities on Form S-3, etc.).

The Super 10-K is not always the answer, but it certainly can reduce expenses associated with preparing several missing periodic reports.

This blog site provides general information about the law only and does not constitute legal advice. You should not act or refrain from acting based on these materials without first obtaining legal counsel. Call one of our attorneys at 800-642-6388 to see how the information in these articles may apply or not apply to your particular situation. This website also contains links to third-party websites. We are not responsible for, and make no representations or endorsements with respect to, third-party websites, or with respect to any information, products or services that those websites might provide.

POSTED BY: Gil Bradshaw
POSTED: 31st March 2014
FILED AS: Capital Markets, Corporate Governance, Corporate Law