SEC Tightens Sarbanes-Oxley Certification Rules

by Glen Shapiro, LawAndTax-News.com, New York

28 March 2003

The Securities and Exchange Commission has announced proposed amendments to its rules and forms that would require companies to provide the corporate officer certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 as exhibits to the periodic reports to which they relate. The Commission also is publishing interim guidance regarding the filing procedures for the certifications required by Section 906, pending the adoption of final rules.

The purpose of the proposed amendments is to make it easier for investors to access the certifications more efficiently. In addition, the Commission's staff, and, in the case of the Section 906 certifications, the Department of Justice, would be able to search a periodic report more expeditiously to verify that the required certifications have been included in the report and to review the certifications.

Section 302 of the Sarbanes-Oxley Act requires the principal executive and financial officers of a company filing periodic reports to certify in each quarterly and annual report, among other things, that the report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to ensure that the statements made, in light of the circumstances under which such statements were made, are not misleading, and that the financial statements, and other financial information included in the report, fairly present in all material respects the financial condition and results of operations of the company.

Section 906 of the Sarbanes-Oxley Act adds a provision to the US criminal laws that contains a separate certification requirement. This provision expressly created new criminal penalties for a knowingly or wilfully false certification.

The proposed amendments affect rules and forms under the Securities Exchange Act of 1934 and the Investment Company Act of 1940.

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