SOX Relief May Be in the Works for Small Public Companies
By: Matt, March 22nd, 2006
The U.S. Securities and Exchange Commission (SEC) will consider a proposal exempting smaller public companies from complying with the Sarbanes-Oxley Act. The Act was passed in 2002 and was designed to increase financial controls within publicly traded companies. The new, soon-to-be-considered proposal would exempt public companies with capitalizations under $700 million. As written, the proposal would affect about 80% of all public companies.
Last week at the University of California at Berkeley advocates of the proposal argued that smaller companies simply do not have the resources to maintain SOX compliance, and further noted that the cost of compliance for small companies can range from $2 million to $4 million.
Those favoring continued SOX compliance for all publicly traded companies counter that smaller companies are often those most in need of greater financial oversight and control, and that relaxing or eliminating regulations would lead to greater problems for small companies.
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