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Compliance Requirements
Public Company Audit Committees
All organisations governed by SEC regulations are required to establish and maintain
an audit committee that shall be responsible for the appointment, compensation and
oversight of any registered public accounting firm employed by that issuer. The
accounting firm shall report directly to the audit committee. All audit committee
members shall be members of the organisation's board of directors but shall be otherwise
independent. They may therefore not be an affiliated person of the organisation
or an associated company, nor may they accept consulting, advisory or other compensatory
fees other than in their capacity as audit committee members.
The audit committee shall establish procedures regarding the handling of complaints
relating to accounting, controls, or auditing matters. They must also develop procedures
for the confidential, anonymous submissions by the organisation's employees concerning
questionable accounting or auditing practices.
The audit committee shall be able to appoint advisors as considered necessary and
to receive adequate funding for the organisation for such purposes.
Corporate Responsibility for Financial Reports
Periodic statutory financial reports are to include certifications that:
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The signing officers have reviewed the report.
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The report does not contain any material untrue statements or material omission
or be considered misleading.
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The financial statements and related information fairly present the financial condition
and the results in all material respects.
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The signing officers are responsible for internal controls and have evaluated these
internal controls within the previous ninety days and have reported on their findings.
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A list of all deficiencies in the internal controls and information on any fraud
that involves employees who are involved with internal activities.
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Any significant changes in internal controls or related factors that could have
a negative impact on the internal controls.
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Organisations may not attempt to avoid these requirements by reincorporating their
activities or transferring their activities outside of the United States
Improper Influence on Conduct of Audits
No officer or director of an issuer may take any action to fraudulently influence,
coerce, manipulate or mislead any accountant engaged in an audit of financial statements
in order to mislead.
Forfeiture of Certain Bonuses and Profits
If, due to non-compliance with the Act, the issuer is required to restate the accounts,
the CEO and the CFO shall reimburse the issuer with any bonus, incentive or equity
based compensation received by them during a twelve month period plus repay any
profits realized from the sale of securities of the issuer in that period.
Officer and Director Bars and Penalties
This section makes changes to the Securities Act 1933 and the Securities Exchange
Act 1934 by removing the words "substantial" when relating to the term
"unfitness".
Insider Trades During Pension Fund Blackout Periods
Except where specifically permitted, it is unlawful for a director or official of
an Issuer of any security to purchase, sell or transfer during any blackout period
if that person obtains such security in connection with their service or employment
as a director or official.
Rules of Professional Responsibilities for Attorneys
The commission is required to issue regulations on minimum standards for attorneys
appearing and practicing before the commission when representing issuers.
Fair Funds for Investors
Where the commission obtains a disgorgement order in respect of a violation of the
law, it shall place such funds into a disgorgement fund for the benefit of the victims.
The commission may also accept gifts, bequests and proceeds specifically donated
to the disgorgement fund.
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