Securities and Exchange Commission (SEC) Chairman William Donaldson would like to give foreign companies more time to comply with the Sarbanes-Oxley Act’s Section 404, the Financial Times reported.
In a speech he gave yesterday at the London School of Economics, Donaldson noted that he had asked the SEC’s staff to consider recommending that the commission “delay the effective date of the internal control on financial reporting requirements for non-U.S. companies,” according to the newspaper. Section 404 requires management to test, and then attest to, the proper design and effectiveness of internal controls.
Lobbyist from the United Kingdom and Germany have complained that foreign companies with shares traded on U.S. exchanges are still saddled with Section 404 Sarbox cost despite offering to delist. That’s because under Sarbox, delisting would be a pointless exercise, European executives told the paper. Indeed, Section 404 compliance is still required of any company with 300 U.S. shareholders, which is a difficult threshold for most large companies to avoid.
Foreign companies that are listed in the U.S. are currently required to comply with Section 404 by July 15.