Courtesy of the Society’s Securities Law Committee and as further discussed in this Davis Polk memo: “Dodd-Frank clawback rule applies to subsidiary issuers and guarantors of listed securities,” companies with subsidiaries that have issued securities listed on NYSE and Nasdaq, usually debt securities, should be aware that the SEC clawback rule likely applies to those subsidiaries. This includes all subsidiaries with listed securities, even if those subsidiaries have no operations or employees and are exempt from filing financial statements because the parent company guarantees the securities.
Society members should be aware that the NYSE has been issuing notifications requesting certifications—the same certifications that the parent companies have provided to the NYSE—that those subsidiaries have adopted the required clawback policies, and will be contacting the subsidiary issuers if there are no responses to the notifications.