New SEC clarification on Forms 10-K, 20-F and 40-F related to compensation clawback rules

Feb 07, 2023
Financial reporting SEC matters Audit Compensation & benefits

The SEC’s Division of Corporation Finance has issued three new Compliance and Disclosure Interpretations (C&DI) to clarify the use of the check boxes on the cover pages of Form 10-K (see question 104.19), Form 20-F (see question 112.04) and Form 40-F (see question 110.09) relating to whether the forms include the correction of an error in previously issued financial statements and a related recovery analysis (that are effective January 27, 2023).

The listing standards are not required to be effective until November 28, 2023, and issuers subject to such listing standards will not be required to adopt a recovery policy for 60 days following the date on which the applicable listing standards become effective. In the C&DI the SEC has explained that it does not expect compliance with the disclosure requirements until issuers are required to have a recovery policy under the applicable exchange listing standard. While the check boxes and other disclosure requirements will be in the rules and forms in 2023, they do not expect issuers to provide such disclosure until they are required to have a recovery policy under the applicable listing standard.

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