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Focus On Accounting: Small Public Companies Exempt from SOX 404(b) Requirement

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On Thursday July 15th the Senate narrowly approved a major financial regulatory reform package. The legislation was approved by the House on June 30th and President Barack Obama is expected to quickly sign it into law.
December 6, 2010

On Thursday July 15th the Senate narrowly approved a major financial regulatory reform package. The legislation was approved by the House on June 30th and President Barack Obama is expected to quickly sign it into law.

The act amends Sarbanes-Oxley (SOX) to make permanent the exemption from its section 404(b) requirement for nonaccelerated filers (those with less than $75 million in market cap) that has temporarily been in effect by order of the SEC. The act also requires the SEC to complete a study within nine months of the act’s enactment on how to reduce the burden of 404(b) compliance for companies with market caps between $75 million and $250 million. The study will consider whether any such methods of reducing the burden, or a complete exemption, would encourage companies to list on exchanges.

The act does not modify requirements under Section 404(a) of SOX, which requires company management to assess the effectiveness of the company's internal controls over financial reporting.

You can read the full text of the act here.

 

Under U.S. Treasury Department guidelines, we hereby inform you that any tax advice contained in this communication is not intended or written to be used, and cannot be used by you for the purpose of avoiding penalties that may be imposed on you by the Internal Revenue Service, or for the purpose of promoting, marketing or recommending to another party any transaction or matter addressed within this tax advice. Further, RubinBrown LLP imposes no limitation on any recipient of this tax advice on the disclosure of the tax treatment or tax strategies or tax structuring described herein.

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