Last week, each of the major stock exchanges filed proposed changes to their listing rules governing the adoption of “clawback” policies that will require listed companies to recover erroneously awarded compensation paid to executive officers in the event of a financial statement restatement. The SEC approved these rule changes (including those of the NYSE, Nasdaq and NYSE American) on an accelerated basis on Friday, June 9, 2023. The effect of these changes is to make the effective date of the rules October 2, 2023, giving listed companies until 60 days later, or December 1, 2023, to adopt compliant policies.

We are updating our March 6, 2023 QuickStudy that discussed the new statutory exemption ‎under section 15(b)(13) of the Securities Exchange Act of 1934 from broker registration that ‎allows unregistered M&A advisers to provide M&A advice and services in certain smaller ‎transactions. As anticipated in our QuickStudy, on March 29, the SEC announced that it ‎revoked the 2014 no-action letter that allowed similar activities by unregistered M&A advisers ‎without the limitations under the statutory exemption.‎

On May 3, 2023, the SEC adopted‎ final rules relating to corporate stock buybacks. The new rules have some significant differences from ‎those the SEC proposed in December 2021. While the new rules do require significantly greater ‎detail about daily stock repurchases in Inline XBRL format, they will only require filing of that ‎information quarterly, in a new exhibit to the company’s Form 10-K and Form 10-Q filings.‎

On April 24, 2023, the SEC extended, for a short time, the deadline for the effectiveness of stock exchange listing requirements under the Dodd Frank Act that will require listed companies to adopt clawback policies for erroneously awarded compensation.

The public comment period for the new NYSE and Nasdaq listing standards requiring public ‎companies to have expanded clawback policies ended on April 3, 2023. The new standards will ‎require listed companies to have clawback policies that provide for the recovery of excess ‎incentive-based compensation of current and former executive officers upon the restatement of ‎the company’s financial statements for any reason (currently recovery of compensation is only ‎required from the CEO and CFO when there is company misconduct). ‎

Following our February 24 post, we learned that representatives of accounting firms sought advice from the SEC on whether they can rely solely on Section 205 Orders to confirm valid issuance of outstanding shares as to which there is uncertainty. We understand that they were informed by the SEC Chief Accountant that a Section 205 Order would not be sufficient and that they should request an opinion of counsel as to the shares being valid as of the time of their issuance.

As April 13th approaches, in-house counsel at public companies should prepare for the electronic Form 144 filing requirement beginning on that date.  Form 144 is the filing that officers and directors of public companies file under Rule 144 when they sell shares of their company’s stock (other than pursuant to a resale registration statement or for sales at or under 5,000 shares and $50,000 in value).