10 October 2002

UNICE comments on Sarbanes-Oxley Act

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The direct and indirect effects of the Sarbanes-Oxley Act on the corporate governance of issuers appear to be far-reaching. Among other things, the Act makes absolutely no distinction between US companies and foreign companies whose securities are registered or listed in the United States.

The risk inherent in the application of the Sarbanes-Oxley Act to non-US issuers, especially as regards corporate governance, is not so much that some of the Act’s individual provisions will conflict with those in force in companies’ country of incorporation, as of a conflict between systems. In this respect it has to be stressed that the Sarbanes-Oxley Act marks a radical change in the attitude of the United States to the application of its corporate governance rules to foreign issuers, which in the past had been granted a sort of general exemption.

The annex to the document contains country notes for individual Member States indicating the provisions of the Act whose effect is to produce a conflict with EU Member States laws. This annex shows that each Member State has its own individual system of corporate governance that provides sufficient protection for investors and of which the general spirit is much the same as is envisaged by the US securities laws and Act.

UNICE document

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