The Securities and Exchange Commission (SEC) on Wednesday passed a rule to require public companies to recover incentive-based compensation doled out to current and former executives in certain cases of accounting restatement.

The new rule, which takes effect 60 days after being posted in the Federal Register, mandates public companies develop policies and procedures that will demand the return of compensation paid to executives if the firm’s finances are restated within the past three years. Failing to implement a policy that meets the requirements of the rule could result in a public company being delisted from U.S. stock exchanges, according to an SEC fact sheet.

Types of compensation that could be clawed back include “options and other equity awards whose grant or vesting is based wholly or in part upon the attainment of any measure based upon or derived from financial reporting measures,” the rule said.

The list of executive titles falling under a firm’s clawback policy under the new rule would have to mirror the definition of “executive officer” in Section 16 of the Exchange Act, which includes the company’s president; principal financial officer; principal accounting officer (or if there is no such accounting officer, the controller); any vice president in charge of a principal business unit; any officer who performs a policy-making function; or any person who performs similar policy-making functions for the issuer, according to the SEC.

Currently, the only executive compensation rule on the books for public companies is contained in the Sarbanes-Oxley Act. It applies only to CEOs and CFOs in cases of misconduct or when material misstatements occur within a year of the compensation being paid.

The new rule significantly widens the types of accounting restatements that should trigger a firm’s clawback policy.

The rule, first included as part of the Dodd-Frank Act, was one of 11 under the law still dormant before SEC Chair Gary Gensler took over command of the regulator last year. The agency in August adopted Dodd-Frank’s pay vs. performance rule.

“I believe that these rules will strengthen the transparency and quality of corporate financial statements, investor confidence in those statements, and the accountability of corporate executives to investors,” said Gensler of the clawback mandates in a press release. “Through today’s action and working with the exchanges, we have the opportunity to fulfill Dodd-Frank’s mandate and Congress’s intention to prevent executives from keeping compensation received based on misstated financials.”

That the new rule does not limit the types of material restatements that would trigger the clawback provision is a major reason SEC Commissioner Hester Peirce, who was in the minority on the issue, opposed the rule.

As Peirce argued in her dissenting statement, entitled “Erroneous Clawbacking,” the rule is too broad for the types of restatements it covers, the number of employees affected, the sizes and types of public companies that will have to develop policies and procedures to comply, and the types of compensation that will be affected.

“[T]he rule is not limited to “Big R” restatements, which restate historical financial statements to correct errors that were material to those previously issued financial statements,” she wrote. “The final rule explicitly also requires clawbacks based on so-called little r” restatements, by which companies restate prior period information in the current period comparative financial statements.”

Including “little r” restatements “unnecessarily complicates the rule and may require clawback analysis when the error did not lead to erroneous compensation during the three-year period, or require a clawback of de minimis amounts,” she wrote.

The SEC on Wednesday also voted to adopt rules affecting mutual fund and exchange-traded fund shareholder reports. The agency further proposed a rule that would prohibit registered investment advisers from outsourcing certain services without first conducting due diligence and monitoring.