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Shearman & Sterling LLP 65 | SEC Rulemaking Roundup Since Chair Gensler assumed his role in April 2021, the rate of rulemaking by the Securities and Exchange Commission has been the subject of frequent public comment. Views range from laudatory to critical, addressing both the pace and substance of the rulemaking, and have led to a number of tense Congressional hearings questioning SEC rulemaking and lawsuits seeking to block the implementation of several new rules. Kenneth E. Bentsen, Jr., President and CEO of SIFMA, has described the pace of SEC rulemaking as "unprecedented" and noted that concerns expressed with the speed and volume of new rule proposals are "well-founded". 1 Regardless of your perspective of how the SEC is approaching its rulemaking, it is as important as ever to stay abreast of these changes and to understand the impacts that they may have on companies, investors and the capital markets. We regularly publish articles covering the SEC's rulemaking activity and offer "our take"—Shearman's analysis and advice to companies who are trying to understand the implications of new rules and what first steps they should be taking in response. As many companies prepare for a new reporting cycle, we believe that it is worth briefly recapping some of the most impactful recently adopted and proposed rules. RECENTLY ADOPTED RULES Compensation Clawback Policies 2 New Exchange Act Rule 10D-1 and new NYSE and Nasdaq listing standards implemented a Dodd-Frank Act requirement for all listed companies to implement a compensation clawback policy for the recovery of any incentive-based compensation that was erroneously granted to an executive officer as a result of an accounting error that subsequently requires financial statements to be restated. Although many companies already had some form of compensation clawback policy in place, this new requirement is broader and, importantly, does not require misconduct to trigger a clawback. We expect by now that most listed companies have adopted a compliant clawback policy ahead of the December 1, 2023 deadline to do so. Companies may also wish to consider reviewing their executive officer determinations (or, in the case of FPIs, determine the covered group of officers for this policy). As part of these amendments, new disclosure requirements were adopted that require companies to disclose if and how they have applied their clawback policies, whether corrections have been made to previously issued financial statements and whether those corrections implicated the clawback policy. With annual reporting season for calendar year-end companies right around the corner, companies must also remember to add the new checkboxes on Form 10-K, 20-F or 40-F cover pages, and may want to begin developing their new clawback-related disclosure. SEC Rulemaking Roundup Ryan Robski and Erika Kent 1 See Kenneth E. Bentsen, Jr., "The Unprecedented Speed and Volume of SEC Rulemaking," https://www.sifma.org/resources/news/the- unprecedented-speed-and-volume-of-sec-rulemaking/ (September 21, 2023). 2 See Shearman & Sterling LLP, "SEC Clawback Rules Take Effect: What Companies Should Do Now," https://www.shearman.com/ en/perspectives/2023/09/sec-clawback-rules-take-effect-what- companies-should-do-now (September 27, 2023). Insights