SEC offers one year reprieve to smaller and foreign companies - update 1

03/03/05 - newratings.com

NEW YORK, March 3 (newratings.com) – The Securities & Exchange Commission (SEC) Wednesday allowed smaller and foreign companies to take an extra year to comply with the internal control provisions of the 2002 Sarbanes-Oxley law on governance.

The one-year extension comes as the SEC prepares to discuss complaints related to internal control procedures with the various industry players at a meeting scheduled to be held on April 13. US-based companies have termed the new rules, set by section 404 of the Sarbanes-Oxley law, costly and onerous. A director of the SEC said, "Given the burdens in designing and implementing Section 404 compliance for smaller and non-US companies, this extension strikes the right balance. Companies should use the extension not to delay but to improve the quality of their efforts." As per the new timetable, smaller and foreign companies, whose shares are listed in the US, must begin certifying the effectiveness of their internal controls for the fiscal years ending on or after July 15, 2006. The SEC had set up an advisory committee in mid-December to study and understand the impact of the anti-fraud laws on smaller public companies in the US.