January 2021

Business News Digest

5 min

Venable attorneys produce periodic alerts and newsletters covering a variety of topics and practice areas. For your convenience, we have assembled below a collection of the latest alerts and newsletters.

Electronic Signatures Permitted for EDGAR Filings

In June 2000, the United States implemented rules addressing the use of electronic signatures in global and national commerce. 15 U.S.C. §§ 7001 to 7006. Some two decades later, the U.S. Securities and Exchange Commission (SEC) has caught up. In early December 2020, the SEC adopted amendments to Regulation S-T and the Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) Filer Manual to permit the use of electronic signature authentication in connection with certain electronic filings on EDGAR. The SEC also updated several rules and forms under the Securities Act of 1933, Securities Exchange Act of 1934, and Investment Company Act of 1940 to permit the use of electronic signatures in signature authentication documents in connection with certain other filings.

A Tightening of SEC Reporting Requirements

On December 8, 2020, the Holding Foreign Companies Accountable Act was sent to President Trump's desk for his signature. The legislation requires certain issuers of securities to disclose to the Securities and Exchange Commission (SEC) information regarding foreign jurisdictions that prevent the Public Company Accounting Oversight Board (PCAOB) from performing inspections under the Sarbanes-Oxley Act of 2002 (the Act). Failure to comply with the Act bars securities from being listed on U.S. exchanges. It is intended to target Chinese companies. The bill dovetails with the work of the President's Working Group on Financial Markets (the PWG), which issued policy proposals at the end of July requiring Chinese companies to comply with U.S. auditing requirements. As expected, the president signed the bill into law on December 18, 2020. The same day, SEC Chair Jay Clayton issued a statement regarding harmonizing the Act and the PWG's work.

Congress Updates and Expands the Paycheck Protection Program

Title III of Division N of the Consolidated Appropriations Act of 2021 (the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act or the "Act") adds a new subsection (a)(37) to the Small Business Act 7(a) loan program, describing new parameters for borrowers seeking to receive a second PPP loan (a "second draw" loan). The Act appropriates $284.45 billion for both new Paycheck Protection Program (PPP) loans under existing subsection (a)(36) and "second draw" PPP loans under new subsection (a)(37), with $35 billion explicitly set aside for first-time PPP borrowers. In addition, the Act appropriates $20 billion for "targeted EIDL advance[s]," $15 billion for "shuttered venue operators" (read our alert on the Shuttered Venue program here), $3.5 billion for loans made under Section 325 (extension of debt relief program), and $2.05 billion for certain other programs.

What's in Your "Natural Disaster"? The Latest Judicial Interpretation of a Force Majeure Provision in a COVID World

In a recent decision from the United States District Court for the Southern District of New York, JN Contemporary Art LLC v. Phillips Auctioneers LLC, 2020 WL 7405262 (S.D.N.Y. Dec. 16, 2020), Judge Denise Cote read "natural disaster" within a force majeure clause to include the COVID-19 pandemic and its resulting impact on performance and termination clauses in a consignment agreement to sell a high-end piece of art. We provide an analysis of the instant decision below. We will see additional decisions on this issue which will help shape precedent, but Judge Cote's does signal the likelihood that courts will be more willing to read the COVID-19 pandemic into general catch-phrases like "natural disasters" or "Acts of God" within existing force majeure clauses.

EEOC Blesses Employer-Mandated COVID-19 Vaccinations

COVID-19 vaccines have arrived. Employers now must ask themselves whether they may require employee vaccinations after the vaccines become readily available. The U.S. Equal Employment Opportunity Commission (EEOC) has published new guidance aimed at helping employers tackle the wave of inquiries and issues that will arise once vaccinations become widely available. In short, the EEOC's new guidance says yes, employers can mandate vaccination, subject to some potential exceptions relating to compliance with disability and religious anti-discrimination and accommodation laws.

SBA Releases Questionnaire to Lenders, Requiring For-Profit and Nonprofit PPP Borrowers of $2 Million or More to Provide Significant Detail on Certification of Need

On October 26, 2020, the Small Business Administration (SBA) issued a notice in the Federal Register that it would be utilizing Loan Necessity Questionnaires in connection with its Paycheck Protection Program (PPP) loan review process. Borrowers who – together with their affiliates, as that term has been defined through the Interim Final Rules and other guidance – received loans with an original principal amount of $2 million or greater must complete the questionnaires.

State and Local Taxation of Remote Workers Creates Headache for Employers with Little Likelihood of a Near-Term Solution

The explosion in the number of remote workers in light of the pandemic has brought to light various state and local tax issues that have long been simmering. While a handful of states have made attempts to address these concerns and a legislative fix by Congress has also been proposed, a unified scheme to prevent such difficulties has not yet been implemented. As a result, employers are finding that their remote workforce has the potential to create unexpected tax exposure in jurisdictions where such employers may have little to no contact other than the mere presence of a telecommuting employee.