Private Companies and Sarbanes-Oxley
The Sarbanes-Oxley Act of 2002 was the U.S. Congressional reaction to Enron, Worldcom, and the other corporate failures experienced in America beginning in the fall of 2001. Passed in haste, the new law left most details for further rule enactment by the SEC.
In general, Sarbanes-Oxley applies equally to U.S. exchange-listed or Nasdaq-traded entities, whether U.S. or foreign-based. Certain of the law’s provisions apply as well to privately-held and not-for-profit corporations, unincorporated groups, and individuals.
The SEC’s rules encountered very active opposition from foreign companies, audit firms, and lawyers, to the point that several proposed U.S. listings by significant foreign corporations have been deferred, and smaller U.S. publicly-held companies have announced plans to go private to avoid the substantial expense of Sarbanes-Oxley compliance.
As Sarbanes-Oxley has come into full force, the separate issue has emerged of the extent to which privately-held and not-for-profit corporations, and foreign publicly-held companies, should endeavor to comply with the various requirements of the new legislation to which they are not expressly subject, as a matter of good corporate governance.
Click here to download the advisory. It is 103 pages in length with 45 pages of model forms and 441KB.
Questions regarding Sarbanes-Oxley and this Advisory may be directed to the Chair of our Corporate Department, Robert A. McTamaney (firstname.lastname@example.org).