On January 30, 2020, the World Health Organization (WHO) declared that the recent coronavirus outbreak was a global health emergency, recognizing that the disease represents a risk outside of China, where it emerged in the last couple of months. 

On the heels of the WHO’s announcement, on the same day in a public statement, Securities and Exhchange Commission (SEC) Chairman Jay Clayton stated that he had requested SEC staff “to monitor and, to the extent necessary or appropriate, provide guidance and other assistance to issuers and other market participants regarding disclosures related to the current and potential effects of the coronavirus.” Mr. Clayton noted that although the SEC recognizes the effects of the virus will be difficult to assess or predict, both generally and as industry- or issuer-specific basis, “how issuers plan for that uncertainty and how they choose to respond to events as they unfold can nevertheless be material to an investment decision.”

U.S. public companies across various industries could be impacted materially by the coronavirus. For example, on January 28, 2020, Starbucks disclosed with its Q1 Fiscal 2020 results that it had temporarily closed more than half of its stores in China, the outbreak is expected to materially affect its results for the next quarter and full year, and it would update its guidance for the year when it can reasonably estimate the impact of the coronavirus. For many companies, supply chains are adversely affected.  And limitations on travel, whether on people or cargo, could have significant impacts. Reporting companies have a duty to ascertain and disclose the outbreak’s impact on their businesses, if material. Coronavirus-related disclosures may be required in, among others, the Business, Risk Factors, and Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) sections of SEC filings. MD&A requires companies to consider and disclose certain known trends and uncertainties. Even if a company’s risk factor already states that its business may be adversely and materially affected by outbreaks of diseases, the company would need to consider updating the risk factor if the impact of the coronavirus is no longer just a hypothetical one.