SEC Offers "Sample Letter" for Disclosure on Russian Risk

The SEC Division of Corporation Finance provided guidance in the form of a "sample letter" to companies obligated to disclose the impacts that Russia's invasion of Ukraine "have had or may have on their business."

The Division stated that, in order to satisfy disclosure obligations, companies should provide detailed disclosures as to:

• exposure to operations or other business activities in Russia, Belarus or Ukraine;

• reliance on goods or services sourced in Russia or Ukraine, or any supporting country;

• disruptions in the companies supply chains; and

• business relationships with, connections to or assets in Russia, Belarus or Ukraine.

The Division cautioned that the disclosures may require updating. The Division stated that companies should consider disclosing (i) heightened cybersecurity risks, (ii) increased or ongoing supply chain issues and (iii) the impact of the volatility of the trading prices of commodities.

The Division also urged companies to consider how these matters affect (i) disclosure controls and procedures, (ii) the effectiveness of internal control over financial reporting and (iii) the role of high-level executives in the risk oversight of any action relating to Russia's invasion of Ukraine and decision to halt operations.