European companies are pressuring U.S. regulators to delay the implementation of a number of provisions of the Sarbanes-Oxley Act, according to the Financial Times.
The FT reported that Digby Jones, director general of the United Kingdom’s Confederation of British Industry, will send a letter Monday to the Securities and Exchange Commission seeking “a significant extension to the deadline” for non-U.S. companies to comply with Sarbanes-Oxley Section 404, which requires companies to document their internal controls over financial reporting.
According to the newspaper, about 300 European companies, including more than 100 based in the U.K., file reports with the SEC and are therefore subject to Section 404. Their current compliance deadline is for fiscal years ending after July 15; the U.K. group hopes to push back that date until December 31, reported the FT.
The Confederation of British Industry certainly has an ally in SEC chairman William Donaldson. In a speech late last month at the London School of Economics Donaldson noted that he had asked the SEC 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.
European executives have complained that even if their companies delist from U.S. exchanges, they are still likely to be saddled with Sarbanes-Oxley compliance costs, noted the FT. Indeed, any company with 300 U.S. shareholders — a difficult threshold for most large companies to avoid — must comply with Section 404.