UK companies listed in the US have been handed a corporate governance lifeline after the SEC said it would consider a further delay in the adoption of the controversial section 404 of the Sarbanes Oxley act for non-US companies.
Link: SEC open to delisting for UK companies
A further ‘four or five month’ postponement period is likely to be granted to help European and UK corporates cope with the increasing burden of compliance and regulation, in particular the move to international financial reporting standards.
‘I have asked the staff of the commission to consider whether to recommend that we delay the effective date of the internal control on financial reporting requirements for non-US companies,’ said SEC chairman, William Donaldson, speaking at the London School of Economics on Tuesday.
‘It’s clear that we need to take a look at some of the details that can be improved,’ he continued.
The stance will be seen as a climb-down, following a period of intense lobbying from European business leaders, not least the Confederation of British Industry’s Digby Jones.
The SEC will also consider whether to make deregistration from US markets easier, following complaints over the costs of listing in the US.
David Howell, the outgoing CFO of Lastminute.com, which quit Nasdaq last year because of the regulatory cost, said the move was too little too late. ‘Even without Section 404 the cost of listing was about £500,000,’ he told Accountancy Age. ‘Section 404 moved it into a whole new stratosphere.’
Sir Bryan Nicholson, chairman of the Financial Reporting Council, described Donaldson’s speech as ‘middle of the road’ and the suggested measures as a ‘typically common sense’ approach.