More Sox 404 relief

Relief from Section 404 Compliance Dates for Smaller Companies (Non-Accelerated Filers).

The SEC proposed to grant relief to smaller public companies by extending the date by which non-accelerated filers must start providing a report by management assessing the effectiveness of the company's internal control over financial reporting. The initial compliance date for these companies would be moved from fiscal years ending on or after July 15, 2007, until fiscal years ending on or after Dec. 15, 2007. The SEC also proposed to extend the date by which non-accelerated filers must begin to comply with the Section 404(b) requirement to provide an auditor's attestation report on internal control over financial reporting in their annual reports. This deadline would be moved to the first annual report for a fiscal year ending on or after Dec. 15, 2008. This proposed extension would result in all non-accelerated filers being required to complete only the management's portion of the internal control requirements in their first year of compliance with the requirements. Comments are due on this proposal within 30 days.

Relief from Section 404(b) Compliance Date for Certain Foreign Private Issuers.

The SEC granted relief from Section 404(b) compliance for foreign private issuers that are accelerated filers (but not large accelerated filers), and that file their annual reports on Form 20-F or 40-F. These companies will have their compliance deadline extended for an additional year, so that they will not begin complying with the Section 404(b) requirement to provide an auditor's attestation report on internal control over financial reporting in their annual reports until fiscal years ending on or after July 15, 2007. This group of issuers will be required to comply only with the Section 404 requirement to include management's report (and updated CEO and CFO certifications) in the Form 20-F or 40-F annual report filed for their first fiscal year ending on or after July 15, 2006. They will not need to comply with the requirement to provide the registered public accounting firm's attestation report until they file a Form 20-F or 40-F annual report for a fiscal year ending on or after July 15, 2007.

Proposed Transition Relief for Newly Public Companies.

In the same release in which it proposed an extension of the Section 404 compliance dates for non-accelerated filers, the SEC also proposed a transition period for newly public companies. This transition relief would apply to any company that has become public through an IPO or a registered exchange offer, or that otherwise becomes subject to the Exchange Act reporting requirements. It would include a foreign private issuer that is listing on a U.S. exchange for the first time. To provide meaningful relief to companies that are new to the U.S. markets and our reporting requirements, the SEC is proposing that a company would not be required to provide either a management assessment or an auditor attestation report until it has previously filed one annual report with the SEC. By not requiring the Section 404 reports until a newly public company files its second annual report with the SEC, the SEC hopes to increase the efficiency and effectiveness with which those companies ultimately meet their Section 404 compliance obligations.

Here are the relevant proposals and final rules:

http://www.sec.gov/rules/final/2006/33-8730.pdf