On October 26, 2022, the Securities and Exchange Commission adopted final rules implementing the Dodd-Frank requirement for issuers to recover incentive-based compensation erroneously paid to current and former executive officers due to an accounting restatement.

These rules were originally proposed in July of 2015, and subsequently reopened for comment in October 2021 and June 2022.3 Under the Clawback Rules, substantially all issuers (including FPIs, EGCs, SRCs, and controlled companies) will be required to implement and disclose “no fault” clawback policies that meet strict recovery standards for both “Big R” and “little r” restatements.

The Clawback Rules require listing exchanges to adopt clawback standards that go into effect no later than fourth quarter 2023, with issuers required to implement policies within 60 days thereafter. Issuers should be prepared to have policies in effect no later than the fall of 2023.

Please click here to read the full alert memorandum.

On Friday, the SEC reopened the comment periods for several rulemaking releases due to a technological error that resulted in a number of public comments not being received by the SEC.  The reopening affects several important rulemakings, including those on climate-related disclosure, share repurchases, cybersecurity and SPACs.  While there has been no official update on timing from the SEC, the reopening makes it highly unlikely that it will issue final rules on these topics in October and casts doubt on its ability to do so by the end of the year. Continue Reading SEC Comment Period Reopening

Antitrust enforcement agencies have recently asserted that private equity firms deserve heightened scrutiny when engaging in corporate transactions. However, in the recent Change Healthcare decision, the Court found that a proposed divestiture to a private equity sponsor would adequately preserve competition. Rejecting the DOJ’s arguments to the contrary, the Court found that the sponsor’s “incentives are geared towards preserving, and even improving, [the business’s] competitive edge.”

Please click here to read the full alert memorandum.

Last week, the Financial Crimes Enforcement Network of the Department of the Treasury adopted a final rule (the “Final Rule”) to implement the beneficial ownership reporting requirements of the Corporate Transparency Act, part of the Anti-Money Laundering Act of 2020.

This legislation requires a range of U.S. legal entities, and non-U.S. legal entities registered to do business in the United States, to report information on their underlying beneficial owners to FinCEN. The Final Rule provides for a January 1, 2024, effective date.

Every company or other legal entity that has been formed or does business in the United States, either directly or through subsidiaries, and their corporate and legal advisors, should review the CTA and the Final Rule to understand whether it will impose reporting requirements on them. Going forward, the requirements of the Final Rule will need to be considered in any type of financial or corporate transaction that involves the creation or acquisition of legal entities in the United States, with relevance for mergers and acquisitions, private equity and private funds, structured finance and restructurings, among others.

Please click here to read the full alert memorandum.

On August 25, 2022 the SEC adopted final rules (the so-called “pay vs. performance” rules) that will require U.S. public companies (including smaller reporting companies (“SRCs”) but excluding emerging growth companies, foreign private issuers, and registered investment companies) to disclose information reflecting the relationship between executive compensation “actually paid” and company financial performance for the five most recently completed fiscal years (three years for SRCs). Continue Reading Final Pay vs. Performance Rules: Teaching Old Disclosure New Tricks

As you are likely aware, the SEC published in March 2022 an ambitious proposal to require public companies to provide climate-related disclosures. If the proposal is adopted – which seems likely, at least in some form – it will place heavy new demands on public companies and require them to provide climate-related information in their registration statements and annual reports filed with the SEC. Continue Reading Cleary Submits Comments on SEC Climate Proposal

In March 2022, the SEC proposed a package of rules and rule amendments governing special purpose acquisition companies (SPACs), SPAC initial public offerings (IPOs) and SPAC mergers with a target company (de-SPACs).  Among those provisions was proposed new Rule 140a, which would provide that any underwriter in a SPAC IPO that “takes steps to facilitate the de-SPAC transaction” would be deemed an underwriter in the de-SPAC transaction.

Cleary submitted a comment letter with respect to the underwriter provisions of the proposal on June 13, which notes the conflict between the proposed Rule 140a and the statutory term “underwriter.” Click here to read the letter.

The SEC published in March 2022 an ambitious proposal to require public companies to provide climate-related disclosures. If the proposal is adopted – which seems likely, at least in some form – it will place heavy new demands on public companies and require them to provide climate-related information in their registration statements and annual reports filed with the SEC.

Cleary submitted a detailed comment letter on the proposal on June 16.