Israel-Hamas War: SEC Disclosure and Governance Considerations

15 minute read | December.01.2023

The Hamas terrorist attacks in Israel on October 7th and the Israel-Hamas War have had devastating impacts and threaten to destabilize the region, creating a number of challenges for a wide range of companies. Public companies are grappling with the implications of the conflict on their operations, officers, directors and employees, agreements and business relationships, including with customers and third parties such as suppliers, vendors, manufacturers and distributors. Public companies that are or may be impacted should consider whether to disclose the impacts in SEC filings and earnings releases, as well as whether additional board oversight may be required.

This update identifies areas of focus for public companies as they consider potential specific impacts, as well as more general effects of the War, such as those involving the global economy, market conditions, political and social instability, supply chain disruptions, regulatory uncertainty, sanctions, export restrictions, future terrorist attacks, security events and armed conflicts and the involvement of other parties in the War. Any of those effects may cause market volatility and negative macroeconomic effects, constrain capital-raising and liquidity opportunities, increase costs, interrupt operations and negatively affect the price, availability of and demand for goods and services.

Disclosure Considerations

While the SEC has not published disclosure guidance for the Israel-Hamas War, public companies should look to the SEC’s guidance in connection with other significant conflicts or global events as it provides a useful framework. In May 2022, the SEC published guidance for companies regarding disclosure obligations with respect to the impact that Russia’s invasion of Ukraine and the international response have had or may have on their businesses. Among other things, the SEC suggested that to satisfy disclosure obligations under federal securities laws, companies should provide detailed disclosure, to the extent material or otherwise required, regarding (1) direct or indirect exposure to Russia, Belarus, or Ukraine through their operations, employee base, investments in such countries, securities traded in Russia, sanctions against Russian or Belarusian individuals or entities, or legal or regulatory uncertainty associated with operating in or exiting Russia or Belarus, (2) direct or indirect reliance on goods or services sourced in Russia or Ukraine or, in some cases, in countries supportive of Russia, (3) actual or potential disruptions in the company’s supply chain, or (4) business relationships, connections to, or assets in, Russia, Belarus, or Ukraine. The SEC also mentioned that companies may need to disclose any heightened cybersecurity risks they experience, increased or ongoing supply chain challenges and volatility related to the trading prices of commodities, regardless of whether they have operations in Russia, Belarus, or Ukraine.


Companies should evaluate the impact of the Israel-Hamas War on their earnings and operations, as well as reevaluate previously issued financial guidance to determine whether it needs to be updated or withdrawn. A number of companies have addressed the impact of the War in recently filed earnings releases.

  • In its earnings release issued on October 24, 2023, Snap Inc. disclosed in its fourth quarter outlook that it had observed pauses in spending from a large number of primarily brand-oriented advertising campaigns immediately following the start of the War and that due to the unpredictable nature of the War, it believed it would be imprudent to provide formal guidance for its fourth quarter. Snap instead provided internal forecast ranges for its revenue, revenue growth and adjusted EBITDA.
  • United Airlines Holdings, Inc. issued an investor update in connection with its earnings release issued on October 17, 2023 in which it provided a preliminary financial and operational outlook for the fourth quarter, assuming the suspension of flights to Tel Aviv for October only, as well as through year-end.
  • Align Technology, Inc. stated in its business outlook for fiscal 2023 that it anticipated increasing headwinds from macro uncertainty, and potential supply issues related to the War for its Systems and Services business.
  • In its earnings release issued on November 1, 2023, the Estée Lauder Companies Inc. in its outlook for the second quarter and full year fiscal 2024 accounted for potential impacts on its sales and earnings per share due to the risk of further business disruptions in Israel and other parts of the Middle East.
  • Norwegian Cruise Line Holdings Ltd. stated in its earnings release on November 1, 2023 that it had canceled and redirected all calls to Israel and certain calls to the surrounding region for the remainder of 2023 and is in the process of doing so for 2024.

Current Reports on Form 8-K

Companies should consider filing a Current Report on Form 8-K to disclose any material developments related to the War outside of the quarterly cycle to inform investors or update registration statements. Even if no specific Items on Form 8-K are triggered, companies should consider making updates under Form 8-K Item 7.01 Regulation FD Disclosure or Item 8.01 Other Events. Business and operational impacts to consider for disclosure include direct or indirect disruptions to the business, operations or workforce or those of customers or related third parties, travel-related disruptions, supply-chain related disruptions and market-related disruptions. Companies should also consider economic, political and social risks, such as general market volatility and instability, impacts to the financial and credit markets, commodities and currencies, geopolitical and trade risks, the involvement of other parties (including other countries, markets and businesses) in the War, violent and/or disruptive protests and terrorist acts, export restrictions and sanctions.

  • On October 10, 2023, Ondas Holdings Inc., a provider of private wireless, drone, and automated data solutions, filed a Form 8-K with the SEC under Items 5.02 and 8.01, disclosing that its Israel-based operations were continuing, with U.S. teams supporting operations in Israel and the Middle East. The company also said that its Israel-based personnel were accounted for and safe and disclosed that its CFO was temporarily stepping down as a result of being drafted into the Israeli army.
  • Oshkosh Corporation, an industrial technology company and manufacturer, filed a Form 8-K on October 26, 2023, updating its risk factors to, among other things, include disclosure about further potential strain on global supply chain as a result of the War. 

Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q

Companies should consider updates that may be needed in their Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K for the next reporting period as a result of the impacts of the War. Statements made in Form 10-Q and Form 10-K, including those in MD&A and Risk Factors, should be updated as of the filing date to disclose actual or potential impacts even if they occurred after the close of the fiscal period covered by the report.

Risk Factors and Business — Companies should consider whether to add risk factors relating to the War and its impacts on the company. They should also consider whether to enhance general risk factors, such as those relating to economic, political and social conditions. Companies should also consider whether to update descriptions of their business.

  • In its Form 10-K filed with the SEC on November 16, 2023, Kulicke and Soffa Industries, Inc., a developer of semiconductor and electronics assembly solutions, stated in its risk factors that its assets and operations in Israel could be vulnerable to property damage, inventory loss, business disruption and expropriation as a result of the War. It also referenced the War’s potential impacts on supply chains, transport networks, telecommunications and financial systems and other critical infrastructure it needs to conduct business in Israel, as well as the heightened risk of cybersecurity incidents.
  • In its Form 10-Q filed with the SEC on November 14, 2023, Actelis Networks, Inc., a provider of networking solutions for wide-area IoT applications, included a risk factor which, among other things, described risks relating to its executive offices, research and development facilities and directors, officers and employees in Israel, potential irregularities in its supply chain and potential disruptions to its import of components and raw materials and export of goods. Actelis also noted that its commercial insurance does not cover losses that may occur as a result of the security situation in the Middle East, that government coverage for damages may be insufficient and that any interruption to its business may not be adequately covered by business interruption insurance. 
  • ZipRecruiter, Inc., a two-sided marketplace for work, included a risk factor in its Form 10-Q filed with the SEC on November 8, 2023 describing risks associated with having operations and employees in Israel, potential disruptions to the development and launch of additional products or services, potential disruptions to the businesses of its local contractors and potential fluctuations in international currency markets.
  • In its Form 10-Q filed with the SEC on November 8, 2023, Innovid Corp. disclosed in its risk factors that certain research and development timelines could be impacted as a result of one of its research and development facilities being located in Israel.
  • In its Form 10-Q filed with the SEC on November 7, 2023, Alector, Inc., a clinical stage biopharmaceutical company, referenced in its risk factors the potential interference of the War on its ability to prosecute, maintain, enforce and defend patents in Israel.
  • A number of companies have referenced the impact to operations from the obligations of company personnel to be on reserve for or perform military service as a result of the War (see Actelis’ Form 10-Q filed with the SEC on November 14, 2023 and Kulicke and Soffa’s Form 10-K filed with the SEC on November 16, 2023).
  • Companies have also referenced the potential impacts to their businesses if partners fail to perform obligations under their contracts citing force majeure provisions (see Actelis’ Form 10-Q filed with the SEC on November 14, 2023 and My Size, Inc.’s Form 10-Q filed with the SEC on November 14, 2023).

Forward-Looking Statements — Companies should update forward-looking statements based on the impacts of the Israel-Hamas War otherwise described in their public filings. To date, many companies have added disclosure in forward-looking statements related to the possible effects of the War, future terrorist attacks, armed conflicts or threats thereof, involvement of third parties in the War, sanctions and similar events on their business, operations, prospects, employees, supply, demand, capital markets, inflation, economic, geopolitical and financial conditions.

MD&A — Companies should consider whether to update their MD&A for any known trends or uncertainties that have had or are reasonably likely to have a material impact on the company’s cash flows, liquidity, capital resources, cash requirements, financial position or results of operations arising from, related to, or caused by the War.

  • In its Form 10-Q filed on November 2, 2023, Dentsply Sirona Inc., a manufacturer of professional dental products and technologies, included a subsection in its MD&A on the impact of the War, describing its operations and manufacturing facilities in Israel, the percentage of total net sales and segment net sales from products manufactured in Israel and the value of its net assets within Israel.
  • In its Form 10-Q filed with the SEC on November 2, 2023, Booking Holdings Inc. disclosed the War’s negative impact on its room night growth, particularly in Israel. The company included room night growth for October 2023 excluding Israel and noted that its outlook for the fourth quarter took into account the impact of the War.
  • In its Form 10-Q filed with the SEC on November 7, 2023, Vishay Precision Group, Inc., a global company focused on precision measurement and sensing technologies, added a section to its MD&A describing the impact of the War on the company and disclosing the percentage of total worldwide revenues from Israeli manufacturing facilities and implementation of a contingency plan to secure supply of materials and logistics.
  • In its Form 10-Q filed with the SEC on November 8, 2023, Payoneer Global Inc., a financial technology company, included disclosure under Key Developments and Trends in its MD&A about the potential impact of the War on its operations and revenues. It disclosed that 50% of its global employee base and 80% of its R&D resources are located in Israel, with less than 10% of its Israeli workforce having been called to military reserve duty.
  • Teradyne, Inc., a supplier of automated test equipment and robotics solutions, disclosed in its MD&A in its Form 10-Q filed with the SEC on November 3, 2023 that the War could have a negative impact on future revenue and supply chain. It indicated that its customers in Israel may experience delays in product releases due to the War’s impacts on customers’ labor force and suppliers.
  • Some companies have mentioned potential impacts of the War on the availability and cost of capital in their liquidity discussion of the MD&A. Others have disclosed potential risks related to high energy prices and oil supply and price instability in the Middle East (see Superior Group of Companies, Inc.’s Form 10-Q filed with the SEC on November 6, 2023, Pioneer Natural Resources Company’s Form 10-Q filed with the SEC on November 2, 2023 and HireQuest, Inc.’s Form 10-Q filed with the SEC on November 8, 2023).

As mentioned in the SEC’s guidance on Russia’s invasion of Ukraine, trends or uncertainties may include impairments of financial assets or long-lived assets; declines in the value of inventory, investments, or recoverability of deferred tax assets; the collectability of consideration related to contracts with customers; and modification of contracts with customers, among other things. Companies may need to enhance their disclosures on critical accounting estimates related to impairment of assets, valuation of inventory, allowance for bad debt, deferred tax asset valuation allowance, or revenue recognition, if applicable.

Non-GAAP Financial Measures — Companies should carefully evaluate any adjustments they may wish to make to their non-GAAP measures in connection with the Israel-Hamas War. In the guidance it put out in connection with Russia’s invasion of Ukraine, the SEC reminded companies to make sure any adjustments are appropriate, including adjustments related to (i) revenue that was not earned as a result of the invasion or supply chain disruptions and (ii) expenses that do not represent normal, recurring operating expenses.

Financial Statements — Impacts on financial reporting and accounting should be considered and discussed with the company’s independent auditor. Financial statements may need to disclose impairment of assets, changes in inventory valuation, deferred tax asset valuation allowance, disposal or exiting of a business, de-consolidation, changes in exchange rates, and changes in contracts with customers or the ability to collect contract considerations, if applicable.

Disclosure & Internal Controls — Companies should consider how the War may affect management’s evaluation of disclosure controls and procedures and management’s assessment of the effectiveness of internal control over financial reporting.

Registration Statements

Companies contemplating filing registration statements with the SEC should consider the above-mentioned SEC reporting and disclosure requirements and accounting implications on the preparation of registration statements. Companies with effective registration statements may need to amend and/or suspend their registration statements to reflect material updates.

Governance Considerations

Companies should also consider appropriate governance and management processes relating to the Israel-Hamas War, including the role of the board of directors in overseeing risks, setting policies and taking public positions. The Delaware Chancery Court’s decision in Simeone v. The Walt Disney Co., C.A. No. 2022-1120-LWW, suggests that the board has responsibility for policies and company positions on matters of public policy or political, religious or social significance. Simeone involved a plaintiff’s request to inspect certain books and records of The Walt Disney Co. after the board determined to publicly oppose Florida House Bill 1557, titled “Parental Rights in Education,” which contains limits on the instruction of certain topics related to sexual orientation and gender identity in Florida public schools. In denying the plaintiff’s request for inspection because he failed to present evidence to suggest a credible basis for wrongdoing, the court stated that the Disney board’s decision “to speak (or not speak) on public policy issues is an ordinary business decision” rather than any wrongdoing and that the “case exemplifies the challenges a corporation faces when addressing divisive topics—particularly ones external to its business.” The court continued: “Individual investors have diverse interests—beyond their shared goal of corporate profitability—and viewpoints that may not align with the company’s position on political, religious, or social matters. Yet stockholders invest with the understanding that the board is empowered to direct the corporation’s affairs. The board may delegate implementation to management, but it alone bears the ultimate responsibility for establishing corporate policy.” In rejecting the plaintiff’s claim that the board engaged in wrongdoing, the court noted: “The Board did not abdicate its duties or allow management's personal views to dictate Disney's response to the legislation. Rather, it held the sort of deliberations that a board should undertake when the corporation's voice is used on matters of social significance.” The decision in Simeone suggests that, in certain circumstances, a board-level decision may be warranted in connection with policy decisions related to the Israel-Hamas War, including public positions a company may take on the War.

Other Considerations

Companies should also consider reviewing their operations and internal controls to ensure there are no connections to sanctioned groups and individuals. On October 18, 2023, the U.S. Department of Treasury’s Office of Foreign Assets Control sanctioned ten Hamas terrorist group members, operatives and financial facilitators in Gaza and elsewhere including Sudan, Turkey, Algeria, and Qatar, targeting members managing assets in a secret Hamas investment portfolio, a Qatar-based financial facilitator with close ties to the Iranian regime, a key Hamas commander and a Gaza-based virtual currency exchange and its operator. “The United States is taking swift and decisive action to target Hamas’s financiers and facilitators following its brutal and unconscionable massacre of Israeli civilians, including children,” U.S. Treasury Secretary Janet L. Yellen said in a press release. “The U.S. Treasury has a long history of effectively disrupting terror finance and we will not hesitate to use our tools against Hamas. We will continue to take all steps necessary to deny Hamas terrorists the ability to raise and use funds to carry out atrocities and terrorize the people of Israel. That includes by imposing sanctions and coordinating with allies and partners to track, freeze, and seize any Hamas-related assets in their jurisdictions.” Hamas has been on the list of Specially Designated Global Terrorists since October 2001.