The SEC has further extended the SOX Section 404 compliance dates for non-accelerated filers and newly public companies. The extensions are intended to reduce compliance burdens by giving the SEC and PCAOB time to pursue ongoing initiatives to streamline SOX Section 404 requirements, in particular for smaller public companies. Absent this latest extension, non-accelerated filers would have been required to include both a management’s report on the effectiveness of internal controls and an auditor’s attestation on management’s report in annual reports for fiscal years ending on or after July 15, 2007. Now non-accelerated filers, including foreign private issuers that are non-accelerated filers, will need to include a management’s report in annual reports for fiscal years ending on or after December 15, 2007, but will not need to provide the auditor’s attestation until annual reports for fiscal years ending on or after December 15, 2008. Pursuant to a separate extension the SEC adopted last August, foreign private issuers that are accelerated filers (but not large accelerated filers) must include a management’s report in annual reports for fiscal years ending on or after July 15, 2006, but are not required to include the auditor’s attestation until their first report for a fiscal year ending on or after July 15, 2007. Non-accelerated filers and foreign private issuers that take advantage of the extensions and do not include an auditor’s attestation with their management’s reports must note that omission, and such reports will be deemed “furnished”, rather than “filed”.

Newly public companies, including foreign private issuers listing on a U.S. exchange for the first time, are also given relief under the new rules. These issuers need not comply with the SOX 404 requirements until their second annual report after going public or listing in the U.S. This relief also applies to foreign private issuers that become subject to the Exchange Act reporting requirements through a transaction with a reporting company, for example, the acquisition of a smaller U.S. public company. Companies taking advantage of these transition rules must include a statement to that effect in their first annual reports.

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