WASHINGTON, D.C. (February 16, 2006) -- The Securities and Exchange Commission’s (SEC) Advisory Committee on Smaller Public Companies released a draft report today containing favorable recommendations to reform Section 404 of the Sarbanes-Oxley Act of 2002. BIO led industry efforts to ease compliance burdens of Section 404 for smaller companies. The draft report reflects a majority of the reforms expressed by BIO.
“Based on these recommendations, it is clear that the advisory panel understands the burden that the Sarbanes-Oxley Act is placing on smaller public companies,” said Jim Greenwood, BIO President and CEO. “The recommendations indicate a call for modifications in the implementation of this important legislation.”
“We are pleased to see that the committee recommended full exemption from Section 404 for microcap companies and an exemption from costly external auditor requirements for smaller public companies,” Greenwood said. “However, it will be very important for the Committee to clarify how the revenue benchmarks will be determined.”
The SEC formed the 21-member advisory committee to consider ways of improving the impact of Sarbanes-Oxley on small public companies. Sarbanes-Oxley, the corporate governance law, requires publicly traded companies to adhere to a one-size-fits-all approach to financial reporting and auditing procedures.
The advisory committee will meet next week to discuss the draft and release it for public comment. The draft report can be found at http://www.sec.gov/info/smallbus/acspc/acspc-finalreport_d.pdf. The final recommendations will be sent to the Commission in April 2006.
BIO represents more than 1,100 biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and 31 other nations. BIO members are involved in the research and development of healthcare, agricultural, industrial and environmental biotechnology products.