SEC to consider rules for small companies

US regulators are to consider how they can write specific rules for smaller public companies following a wave of complaints about the costs associated with the Sar-banes-Oxley legislation.
The Securities and Exchange Commission yesterday announced the establishment of a taskforce that will make recommendations on how the SEC could write rules that differentiate between big and smaller listed companies.
The intensive drive to. reduce red tape for smaller companies will focus on whether they should abide by distinct rules in four areas. They are corporate governance; financial reporting; internal controls; and stock offering?.
The SEC has produced many rules to implement the 2002 Sarbanes-Oxley law on corporate governance and accounting, which was drawn up after the Enron and WorldCom scandals and makes no distinction between big and smaller companies.
The most expensive provision is Section 404 of the legislation and its stipulation that companies document and test their internal controls against fraud.
The SEC insisted it was not seeking to roll back Sarbanes-Oxley and other | securities laws but would look at whether the rules it devises pursuant to legislation can be tailored for j smaller companies.
William Donaldson, SEC chairman, said: "The Sarbanes-Oxley Act has already been of enormous benefit to America's investors and markets and will spur further improvements. Now the time is ripe to review how the act, including areas like internal control reporting and other aspects of the SEC's regulations, affect smaller companies."
The SEC advisory committee on smaller public companies, as it will be called, is to be jointly chaired by Herbert Wander, a partner in law firm Katten Muchin Zavis Rosenman, and James Thyen, chief executive of Kimball International, an electronics and furnishings manufacturer.
Mr Thyen said the Sarbanes-Oxley law "has raised the level of excellence in our company but it has caused us to adjust our costs and has affected our global competitiveness".
Some smaller companies have decided to go private because of the increased costs imposed by the law and others have sought to de-register their stock with the SEC and so escape the. reporting requirements.