KMK Law Corporate & Securities Blog

On April 24, 2023, the Securities and Exchange Commission extended the time period to take action on proposed listing standards to implement the Dodd-Frank “Clawback Rules.” As discussed in a previous blog post, the SEC adopted Rule 10D-1, which required U.S. stock exchanges to adopt listing standards that comply with the SEC’s Clawback Rules.

On February 22, 2023, the New York Stock Exchange and Nasdaq filed proposed rule changes to adopt listing standards related to the Clawback Rules. The proposed rule changes were published in the Federal Register on March 13, 2023. Following the publication in the Federal Register, the SEC had 45 days within which to take action on the proposed rule changes. This 45-day period was scheduled to end on April 27, 2023. However, the SEC was permitted to designate an additional 45-day period to take action if it finds this longer period to be appropriate and publishes its reason for doing so.

Accordingly, on April 24, 2023, the SEC published notice designating the additional 45-day period for taking action. The SEC stated it finds the longer period appropriate so it has sufficient time to consider the proposed rule change and all the comments received. The new approval, or disapproval, date is now extended to June 11, 2023. Once the applicable stock exchange listing standards become effective, listed companies will have 60 days to adopt their clawback policies.

NYSE and Nasdaq’s original proposals stated that the proposed rules would be effective on the date approved by the SEC. Unless the exchanges amend these statements in their proposed listing standards, if the SEC approves the exchange proposals in June, that is when the rules will be effective and that will start the 60-day clock for listed companies to adopt a compliant clawback policy, which would put the compliance deadline in early August.