KMK Law Corporate & Securities Blog

On May 20, 2020, the State of Ohio Department of Health (ODH) issued an urgent health advisory (the “Advisory”), named “Ohioans Protecting Ohioans”, in which all individuals currently living within the State of Ohio are recommended to continue to stay at home or at their place of residence to lower the rate of spread of COVID-19. A copy of the Advisory can be found here. Based on Governor DeWine’s press conference on May 19, 2020, the Advisory was meant to replace the “Stay Safe Ohio” Order (the “Order”) that was issued by the Ohio Department of Health on April 30, 2020 ...

On May 4, 2020, the Securities and Exchange Commission announced that it is providing temporary, conditional relief intended to expedite the offer and sale of securities to be issued by smaller companies affected by COVID-19 that are looking to meet their urgent funding needs through a Regulation Crowdfunding offering. The temporary rules are intended to expedite the offering process. The temporary rules apply to securities offerings initiated under Regulation Crowdfunding between May 4, 2020, and August 31, 2020.

Late on May 15, 2020 the Department of Treasury posted the Paycheck Protection Program Loan Forgiveness Application (“Application”) to its website. The application contains step-by-step instructions with worksheets and schedules to help borrowers calculate the amount of their PPP Loan which is eligible for forgiveness.

Although there is much discussion of potential legal immunity from COVID-19 related tort claims among Congressional leaders, states are more likely to take the first steps. The outline for potential liability protection is progressing in the Ohio General Assembly as House Bill 606 and Senate Bill 308 have now been conformed so that substantially similar bills are progressing simultaneously through both houses of the General Assembly. The progress of the bills have garnered support from the leadership of the General Assembly as both Senate President Obhof and Speaker Householder commented that their chambers would prioritize tort liability for businesses reopening during the pandemic. Both bills provide for the following:

On May 13, 2020, the Department of the Treasury (“Treasury”) posted a new update to the Frequently Asked Questions (“FAQs”) it has been periodically updating since passage of the CARES Act.  The new FAQ #46 gives borrowers who, together with their affiliates, have received PPP loans in amounts less than $2 million comfort that the Small Business Administration will not challenge the borrower’s certification that the PPP loan was “necessary” due to economic uncertainty.

On May 8, 2020, Hamilton County, Ohio announced that it would be launching a small business loan program to facilitate the distribution of financial aid to small businesses. The funds to be used in the program were received by Hamilton County under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). Hamilton County received a total of $142 million from the CARES Act and has currently set aside $5 million of these funds for use in the small business loan program. Hamilton County officials have indicated that the aggregate amount of funds used for these small business loans may be increased.

As more and more businesses begin to open their doors to customers, clients are asking what potential liability risk they incur by allowing customers onto their business premises.  Even for businesses that take all the recommended precautions to reduce the risk of exposing customers to the COVID-19 virus, there is no guarantee that the virus will not spread to customers of the business. There is also no guarantee that customers will not allege that they contracted the virus from visiting a particular business resulting in legal costs to that business. Because, in certain situations, contracting COVID-19 can result in missing a substantial amount of work, extended hospital stays and treatments, and even death, the legal costs could become significant.

On April 30, 2020, the Internal Revenue Service (“IRS”) issued Notice 2020-32 which explains expenses paid with Paycheck Protection Program (“PPP”) loan proceeds are nondeductible for tax purposes to the extent the PPP loan is later forgiven.

Earlier today, the Small Business Administration (“SBA”) published a new Interim Final Rule (“IFR”) which limits the amount of Paycheck Protection Program (“PPP”) loans a “single corporate group” may receive to $20 million in total. This limitation appears to apply only to loan disbursements occurring after April 30, 2020, but borrowers should be aware of the limitation and its interplay with other recent SBA guidance.

SEC Provides Guidance on Earnings Disclosures & COVID-19 Impacts

On April 8, 2020, Jay Clayton, Chairman of the SEC, and William Hinman, Director of the SEC’s Division of Corporation Finance, issued a statement discussing the importance of disclosures related to the COVID-19 pandemic in anticipation of upcoming earnings releases and investor calls. In order to encourage more robust disclosures and shareholder engagement on this topic, the statement outlines, among others, several areas of observation and concern for companies:

• Disclosures should reflect the general ...