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12 June 2023
Tapestry
Alert: US
Timeline
for clawback compliance extended!
Dear
Client
Good news!
The deadline for US listed companies to comply with the new
clawback reforms has been extended following last minute amendments
filed by the NYSE and Nasdaq.
Update
In our recent alert in May, we noted the proposed
accelerated deadline for US listed companies to comply with the new
clawback reforms. It was anticipated that the date for companies to
have a compliant clawback policy in place would be 8 August 2023
(rather than the long stop date of 27 January 2024 set out in the
SEC rules) but the position remained unclear.
Last week it was confirmed that the deadline was extended. Both the
NYSE and Nasdaq filed amended proposed listing standards with the
SEC. The key change in the amendments was to propose an effective
date of 2
October 2023, pushing the date for company
compliance to 1
December 2023 (being 60 days after the
effective date). The SEC approved these amended listing standards
on 9 June.
NYSE
amendment
In
addition, the NYSE amendment revised the cure-period provisions.
Initially, the NYSE proposal was requesting delisting procedures
with no cure-period in the event of non-compliance with the new
clawback rules, other than a cure-period for the delayed adoption
of a clawback policy. The proposed amendment aligns with other NYSE
compliance processes, e.g., for late SEC filings, and includes
cure-periods up to 12 months (at the NYSE’s discretion).The Nasdaq
proposed policy already included cure-period provisions.
Updated timings
- 28 November 2022: the final recovery
rules are officially published in the Federal Register, giving
the US national exchanges and associations until 26 February
2023 to propose listing standards in compliance with the final
rules.
- 22 February 2023: the NYSE and Nasdaq
propose their new listing standards, which will take effect
once approved by the SEC.
- 13 March 2023: the new NYSE and
Nasdaq listing standards are officially published in the
Federal Register, giving the public an opportunity to comment
on the proposed listing standards until 3 April 2023.
Under the draft proposals, the SEC must approve or
disapprove the proposed listing standard by 27
April 2023, or within such longer period up to 11 June
2023 (as determined by the SEC).
- 3 April 2023: a collection
of large US and international law firms submit a comment on
the proposed listing standards requesting that the SEC not
approve the adoption and effectiveness of the proposed listing
standard until the 28 November 2023 deadline in order to allow
listed companies time to implement compliant policies and any
controls and procedures necessary to administer such policies.
- 25 April 2023: the SEC extends the
deadline for it to approve or disapprove the proposed listing
standards until at least 11 June 2023, meaning companies would
be required to comply by 8 August 2023 at the earliest.
- 5 June 2023: NYSE filed Amendment
No. 1 to its proposed
clawback listing standards with the SEC, delaying the
effective date to 2 October 2023.
- 6 June 2023: Nasdaq filed an amendment also delaying the
effective date to 2 October 2023.
- 9 June 2023: the SEC approves the
amendments.
- 2 October 2023: this is the current
new effective date as set out in the NYSE and Nasdaq amended
proposals.
- 1 December 2023: a listed company
has 60 days to adopt and file a compliant clawback policy from
the 2 October effective date, meaning that NYSE and Nasdaq
listed companies will need to have a compliant policy in place
by 1 December 2023 (being 60 days later).
Tapestry comment
This is great news and
provides the clarity on company compliance timings that has been
awaited. There was a real concern that companies would struggle to
put in place compliant policies within the truncated timeframe, so
more time is helpful. However, the issues outlined in our earlier
alert remain relevant, so we suggest acting now (if you haven’t
already) to be ready ahead of the 1 December deadline.
Thank you to our US counsel Chris Potash (from Harter Secrest & Emery
LLP) for his continued support on these developments.
If you
need any assistance with your approach to clawback following the
reforms, in the US or globally, please do contact us and we would be happy to
help.
Emilie,
Sally and Sharon
  
Emilie Sylvester
Sally Blanchflower Sharon Thwaites
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