Delisting from US markets should be easier for UK companies struggling with the burdens of Sarbanes-Oxley, according to a key figure at the US Securities and Exchange Commission.
Alan Beller, director of the corporation finance division at the SEC, said that the regulator’s 300-shareholder rule, which has forced many companies to maintain their US listing and has been labelled ‘arcane’ by the New York Stock Exchange (pictured), should be relaxed to a certain degree.
‘For me there is no quarrel that companies should be able to come into and go out of markets as they wish,’ said Beller. ‘But there is the significant issue of investor protection, and we have to balance the two.’
Currently, many non-US companies trading on American exchanges are looking at the possibility of delisting to avoid the large costs of compliance with the Sarbanes-Oxley Act and, in particular, the resource-straining section 404 on internal control.
So far, many have been dissuaded from such a move by the difficulty with deregistering from the SEC due to its 300-shareholder rule. The rule states that once registered, a company cannot withdraw its registration if it has more than 300 US shareholders. Any SEC-registered company still has to comply with Sarbox, regardless of whether it is listed in the US or not.
The concept of completely ignoring a threshold for US shareholders still troubles Beller, however, who also expressed concern over Section 404 driving the issue, rather than it being treated separately.
‘That is not to say something can’t be done, and we are currently thinking about what that something should be,’ Beller added.
Although the SEC has yet to consider any formal proposals over a change to the rules, a spokesman said the issue was under ‘serious consideration’.
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