On July 1, 2015, the US Securities and Exchange Commission (SEC) issued a long-awaited release (Proposing Release) proposing rules that would direct the national securities exchanges to establish listing standards requiring listed companies, including emerging growth and smaller reporting companies, to adopt a policy that requires their executive officers to pay back to the company any incentive-based compensation awarded to them based on incorrect financial information that was later corrected in an accounting restatement.

The SEC was required to issue these rules pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and section 10D of the Securities Exchange Act, as amended (Exchange Act), enacted under the Dodd-Frank Act. Listed companies that do not adopt, disclose, and comply with their recovery policies will be subject to delisting from their exchange.