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The guidance addresses “Big R” versus “little r” restatements, excludes certain immaterial out-of-period adjustments, confirms marking clawback-required boxes even when no recovery is needed, and sets rules for ongoing disclosure after restatements. 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SEC Serves up Fresh Guidance on  \nRestatement Check Boxes and Related Disclosure (and Clarifies when De-SPAC Co-Registrants May Dine and Dash)  \nApril 18, 2025  \nAUTHORS  \nJohn Ablan | Edward Best | Jennifer Carlson | Susan Rabinowitz  \nThe staff (the “Staff”) of the Division of Corporation Finance of the Securities and Exchange Commission (the “SEC”) issued six new Compliance and Disclosure Interpretations (“CDIs”) on April 11, 2025, providing clarifications on disclosure requirements for financial restatement check boxes and the related clawback recovery analysis contained in forms filed pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) . On the same day, the Staff issued a new CDI clarifying its interpretation of Rule 12h-3 under the Exchange Act as it applies to de-SPAC co-registrants.  \nRestatements and Clawback Recovery Analysis  \nIn early 2023, in connection with new rules requiring national securities exchanges to require listed companies to adopt clawback policies and new Item 402(w) of Regulation S-K requiring certain clawback disclosures, the SEC began requiring annual reports (Forms 10-K, 20-F or 40-F) to include two new cover page check boxes. The first box is to be checked when the financial statements included in the annual report reflect the correction of an error to previously issued financial statements, and the second box is to be checked when the error required a clawback recovery analysis under Rule 10D-1(b) of the Exchange Act. A number of questions had been raised about when registrants are required to “check the box” which have now been addressed by the new CDIs.  \nFinancial Statement Error Check Box  \nCDI 104.20 clarifies when companies must mark the check box on the cover page of annual reports indicating the correction of an error in previously issued financial statements. Companies should follow generally accepted accounting principles to determine whether a change represents an error correction. The guidance explicitly states that a restatement to correct an error that is material to previously issued financial statements (known as a “Big R”restatement) and a restatement to correct an error that is immaterial to previously issued financial statements but would be material if corrected in the current period financial statements or left uncorrected (known as a “little r”restatement) require that companies mark the first check box.  \nImmaterial prior period errors that are corrected in the current period financial statements (known as “out-of-period adjustments”) do not trigger this requirement, as these corrections are not considered to be revisions to previously issued financial statements under generally accepted accounting principles.  \nClawback Recovery Analysis Check Box  \nThe new CDIs also address when companies must mark the check box on the cover page of annual reports indicating that a clawback analysis was required as a result of the correction of an error in previously issued financial statements. When a company reports a “Big R” or “little r” restatement, CDI 104.21 confirms that the company must mark the second check box−even if the clawback analysis determines that no recovery is necessary. Companies must also provide a brief explanation as to why no recovery is necessary, such as when (1) no incentive-based compensation was received by executive officers during the relevant clawback period or (2) the compensation received was not based on financial reporting measures affected by the restatement.  \nOngoing Disclosure Requirements  \nCDIs 104.22, 104.23 and 104.24 address the timing and requirements for continuing disclosure after a company reports a restatement. Under CDI 104.24, a company that initially reports a restatement of annual financial statements in a form that does not include the restatement and clawback check boxes (e.g. , a Form 8-K or Form S-1) must mark the check boxes on the cover page of the next annual report that includes s","cbCaitwR5PoikuK2","https://ap.wps.com/l/cbCaitwR5PoikuK2","pdf",286120,"English","# Restatements and Clawback Recovery Analysis\n## Financial Statement Error Check Box\n## Clawback Recovery Analysis Check Box\n## Ongoing Disclosure Requirements\n## Interim Period Restatements","[{\"question\":\"When must a company mark the financial statement error check box on the annual report cover page?\",\"answer\":\"Companies must mark the first box when the annual report financial statements reflect correction of an error to previously issued financial statements, including both “Big R” and “little r” restatements under generally accepted accounting principles.\"},{\"question\":\"Do out-of-period adjustments require marking the financial statement error check box?\",\"answer\":\"No. Immaterial prior period errors corrected in the current period financial statements (out-of-period adjustments) do not trigger the cover-page requirement because they are not revisions to previously issued financial statements under generally accepted accounting principles.\"},{\"question\":\"What does the SEC say about marking the clawback recovery analysis check box when no recovery is necessary?\",\"answer\":\"When a “Big R” or “little r” restatement occurs, companies must mark the second check box even if the clawback analysis concludes no recovery is required, along with a brief explanation why no recovery is necessary.\"}]","Check Please! SEC Serves up Fresh Guidance on Restatement Check Boxes and Related Disclosure - April 18, 2025 | PDF"]