50 Chief executive officers (CEOs) and chief financial officers (CFOs) remain subject to the clawback provisions of the Sarbanes-Oxley Act of 2002 (“SOX”), which provide that if an issuer is required to prepare an accounting restatement because of “misconduct,” the CEO and CFO are required to reimburse the issuer. Under the new rules, the CEO or CFO would not be subject to duplicative reimbursement. Recovery under the new rules will not preclude recovery under SOX to the extent any applicable amounts have not been reimbursed to the issuers. Could issuers seek recovery in different ways? The rules allow boards to seek recovery through means that are appropriate or specific to the circumstances, including, for example, establishing a deferred payment plan that allows executive officers to repay the amounts owed without unreasonable economic hardship. What steps should be taken now? Issuers must start discussions within their boards and audit and compensation committees to plan for new clawback policies, evaluate existing agreements and plans, and review their internal controls. By the time the national securities exchanges adopt the listing standards, it is important to already have working drafts and an understanding of the issues. By February 24, 2023, the national securities exchange must file proposed listing standards that comply with the rules. November 28, 2023, is the latest date for NYSE and Nasdaq’s listing standards to become effective and therefore January 27, 2024 (60 days after listing standards become effective) is the latest potential date for issuers to adopt a compliant clawback policy. The timetable could be accelerated depending on the date when the applicable national securities exchange take action. Accordingly, issuers should continue to monitor developments. Carter Ledyard & Milburn LLP uses Client Advisories to inform clients and other interested parties of noteworthy issues, decisions and legislation which may affect them or their businesses. A Client Advisory does not constitute legal advice or an opinion. This document was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. © 2023 Carter Ledyard & Milburn LLP.