We have heard several entrepreneurship-based proposals recently to get our economy back on track, but one piece seemed to be missing this whole time in the debate: re-evaluating Sarbanes-Oxley for young firms. We have long known that the compliance costs associated with SOX—particularly section 404—have been discouraging many companies from going public, thereby blocking their access to capital and growth. Researchers have suggested that Congress address this issue in some way, and a measure to allow shareholders of companies with market cap below $1 billion to opt-in under SOX was one of the ideas floated in the Startup Act released mid-July. The measure is now gaining track in Congress.
Last week, Rep. Ben Quayle introduced a bill called the Startup Expansion and Investment Act (H.R. 2941), which allows new companies with a market capitalization under $1 billion to opt-out of regulations within section 404 of the Sarbanes-Oxley Act for the first ten years after going public. To inform investors, a company must disclose in its annual reports that it chose to opt out of section 404. Currently, the market capitalization threshold to be exempt from complying with section 404 is $75 million. This high-impact, low-cost reform could significantly expand the number of companies that access the public markets.
To read the full, original article click on this link: Revisiting Sarbanes Oxley - Entrepreneurship.org
Author:Jonathan Ortmans
