Corporate Governance Standards in the United States for Foreign Private Issuers

On July 30, 2002, the Sarbanes-Oxley Act of 2002 (“Act”) came into force. The US Securities and Exchange Commission (“SEC”) subsequently issued several rules and regulations under the Act. In addition, at the urging of the SEC, the major US exchanges and trading markets adopted further significant corporate governance reforms for listed companies.

This article addresses the rules and regulations that have been issued or proposed. In particular, it aims to provide foreign private issuers with an overview of how they may become subject to the Act and certain provisions of the Act. It also examines related corporate governance reforms which are particularly relevant to foreign private issuers. The key issues considered are:
* Companies which are affected by the Act.
* Becoming an issuer under the Act.
* Filings required from financial officers.
* Enhanced disclosure requirements.
* Corporate responsibility requirements.
* The role of the audit committee.
* The role of the Public Company Accounting Oversight Board.
* Auditor independence.
* Corporate governance reforms by the New York Stock Exchange (“NYSE”) and the Nasdaq Stock Market.