The Senate approved the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, H.R. 4173, which was approved by the House on June 30. The approval of this reform bill has been considered the most wide-ranging overhaul of Wall Street rules since the 1930’s. President Obama is expected to quickly sign the bill into law.
Included in the financial reform regulatory package is an exemption from section 404(b) of the Sarbanes-Oxley (SOX) Act of 2002 for smaller reporting companies. Smaller reporting companies are generally considered public filers with a market capitalization below $75 million. This exemption removes the requirement for an audit of internal control over financial reporting by an independent registered public accounting firm. Disclosure of management attestations on internal control over financial reporting under existing section 404(a) would continue to be required for smaller companies.
This bill also includes a provision to direct the SEC to conduct a study within nine months of enactment of this act to determine how to reduce the burden of complying with section 404(b) for companies with market capitalizations between $75 million and $250 million. The study will also consider whether any such methods of reducing the compliance burden, or a complete exemption for such companies from compliance, would encourage companies to list on exchanges in the United States in their initial public offerings.
Nancy Bromall, Assurance Shareholder, also contributed to this Insight.
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