SEC Agrees To Delay Sarbanes-Oxley Implementation For Overseas Firms

by Robin Pilgrim, LawAndTax-News.com, London

07 March 2005

It emerged last Thursday that the US Securities and Exchange Commission (SEC) is postponing for one year the implementation of Section 404 of the Sarbanes-Oxley Act in relation to overseas firms with secondary listings in the US.

The legislation in question, which will now come into force for New York-listed foreign firms in July 2006, requires top executives to vouch for the adequacy of their company's internal controls, and to ensure that the control systems are audited.

However, business organisations such as the Confederation of British Industry have argued that firms in the UK and Europe are already facing a heavy regulatory burden as they attempt to comply with both international accounting standards and the EU financial services action plan.

Speaking to the UK media last week following a meeting with the SEC, CBI director-general, Sir Digby Jones announced that:

"We are pleased that the SEC has granted such a meaningful extension. The mood of our meeting was constructive and I hope this signifies a new mood of consultation and a desire to make Sarbanes-Oxley more workable for non-US businesses."

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