SEC To Consult On Implementation Of Sarbanes-Oxley Provision

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

09 February 2005

It emerged this week that the US Securities and Exchange Commission is planning to hold a roundtable discussion regarding a controversial provision contained in the Sarbanes-Oxley corporate governance Act, which will oblige firms with US listings to assess their internal controls for financial reporting annually.

Speaking at the London School of Economics last month, chairman of the US Securities and Exchange Commission, William Donaldson revealed that the regulator was considering extending the deadline for smaller US companies and non-US firms with secondary listings in the United States to come into compliance with the new rules.

"I have asked the staff of the Commission to consider whether to recommend that we delay the effective date of the internal control on financial reporting requirements for non-US companies," Mr Donaldson told those attending the meeting at the LSE, adding that: "We are prepared to reach out and engage in an open dialogue to address concerns regarding reporting on internal controls."

The regulator's subsequent move to "evaluate the implementation" of section 404 of Sarbanes-Oxley is likely to be welcomed by the US business community, which has argued that the rule will cost millions of dollars in technology upgrades and legal fees, in addition to being time-consuming and labour-intensive.

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