Extension of Section 404 SOX Implementation Date
The Securities and Exchange Commission (SEC) is to grant a further extension to the implementation date of sections 302 and 404 of the Sarbanes Oxley Act for foreign issuers. Donald T Nicolaisen, the SEC’s chief accountant, said: “The section 404 requirements are among the most important parts of the Sarbanes-Oxley Act, and I encourage public companies to devote the necessary resources to make sure those requirements are implemented effectively. I don’t underestimate the effort this will require for smaller companies and foreign private issuers, but this extension will provide additional time for those issuers to take a good hard look at their internal controls, as the Act contemplates.” But the extension should not be seen by non-US companies as extra breathing space, according to the SEC. Shaun Critten, senior partner at London-based advisory firm willismorris said: “It is very encouraging that the SEC is listening to foreign registrants, who feel that they do not have the time to adequately assess the design of internal controls and to put in place cost-effective, long-term remediation strategies. Some companies have been looking at band-aid solutions to get them across the implementation line, yet these solutions may not be sustainable in the long term”.