SEC Notifies Companies Of Ukraine Disclosure Obligations

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Law360 (May 4, 2022, 6:54 PM EDT) — The U.S. Securities and Exchange Commission is advising companies that investors may need them to disclose more details about how Russia’s invasion of Ukraine is affecting their operations.

The agency’s Division of Corporation Finance posted guidance and a sample letter to a hypothetical “ABC Corporation” on its website Tuesday, indicating what questions regulators might ask to assure that material developments stemming from the war are made public.

According to the SEC, companies should provide “detailed disclosure” if they have direct or indirect operations in Russia, Belarus or Ukraine affected by the war; whether they have securities traded in Russia; whether they are affected by financial sanctions imposed on Russia; and any related legal uncertainties caused by the conflict.

Additionally, companies should disclose supply chain disruptions or cybersecurity risks resulting from the war. The SEC also wants to know if companies rely on goods serviced or sourced in Russia or Ukraine, or possibly in countries supporting Russia. Companies should also report business relationships or assets based in Russia, Belarus or Ukraine, regulators said.

Corporate financial statements should reflect whether the value of a company’s assets have been impaired because of the war and related tax impacts, according to the guidance. The SEC is also advising companies to consider how these matters affect their disclosure controls and what role its board of directors play in overseeing risks.

The SEC said public companies should ask it questions if they are unsure what to disclose.

“The sample comments do not constitute

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