March 28, 2023

Volume XIII, Number 87


March 27, 2023

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SEC Issues New C&DIs Regarding Form 10-K “Clawback” Checkboxes

The U.S. Securities and Exchange Commission’s (SEC) Division of Corporation Finance recently released updates to several Compliance & Disclosure Interpretations (C&DIs) related to the SEC’s recently adopted rules directing national securities exchanges to adopt listing standards that require issuers to adopt and implement “clawback” policies. Specifically, the updated C&DIs aim to clarify the SEC’s expectations regarding a set of new checkboxes that have been added to the cover pages of Form 10-K, Form 20-F, and Form 40-F pursuant to the rules. 

Pursuant to the recently adopted rules, the cover pages of Form 10-K, Form 20-F, and Form 40-F have been amended to include a set of new checkboxes intended to indicate:

  1. Whether the financial statements included in the report reflect the correction of an error to previously issued financial statements; and 

  2. Whether any of the error corrections require a recovery analysis under the issuer’s clawback policy. 

While the rules were effective as of Jan. 27, 2023, the SEC’s adopting release noted that the listing standards mandated by the rules are not required to be effective until Nov. 28, 2023, and that issuers subject to such listing standards will not be required to adopt a clawback policy until 60 days following the date on which the applicable listing standards become effective.

Given the disconnect between the effective date of the disclosure requirements mandated by the new rules — including the new checkboxes — and the date upon which issuers are required to adopt the clawback policies that are the subject of such disclosures, the updated C&DIs clarify that the SEC does not expect compliance with the disclosure requirements mandated by the new rules until issuers are required to have a clawback policy under the applicable exchange listing standard, with the SEC noting that “[w]hile the checkboxes and other disclosure requirements will be in the rules and forms in 2023, we do not expect issuers to provide such disclosure until they are required to have a [clawback] policy under the applicable listing standard.”

The affected C&DIs are Exchange Act Forms C&DIs 104.19, 110.09, 112.04, and Exchange Act Rules C&DI 121H.01.

Copyright ©2023 Nelson Mullins Riley & Scarborough LLPNational Law Review, Volume XIII, Number 38

About this Author

Erin Reeves McGinnis Securities Lawyer Nelson Mullins

Erin focuses her practice on securities transactions, including public and private offerings of securities, 1933 Act filings, 1934 Act reporting, corporate governance, SEC compliance, FINRA compliance, and general corporate matters, with a specific emphasis on real estate investment trusts (REITs). She also has significant experience with “Blue Sky” regulatory matters, as well as working with boards of directors and committees thereof, including agenda-setting. Additionally, she counsels clients seeking to create and raise capital through Qualified Opportunity Funds per the recently...

Adam Marshall Atlanta Securities Attorney Nelson Mullins
Senior Associate

Adam Marshall is a Senior Associate at Nelson Mullins' Atlanta office. Adam concentrates his practice on public and private securities offerings, reporting, and compliance under the 1933 Act and the 1934 Act and general corporate matters, with a specific focus on real estate investment trusts (REITs). He also advises clients on “Blue Sky” regulatory matters, Regulation D offerings, and Section 13 reporting requirements. He also has experience advising SPACs on their initial formation, their initial public offering, and their initial business combination.