On March 26, the SEC made a technical correction to the rules implementing Sections 406 and 407 of the Sarbanes-Oxley Act of 2002 by requiring disclosures regarding audit committee financial experts and codes of ethics.
On January 23, 2003, the Commission adopted rules that require disclosure of whether a company has an audit committee financial expert on its audit committee.
After the rules were adopted, questions arose regarding whether the disclosures must be provided in registration statements, as it did not clearly state that such disclosure is required only in annual reports.
As a result, the SEC has clarified that the disclosure of whether a company has an audit committee financial expert serving on its audit committee is only required in annual reports.
A company may, at its discretion, include the audit committee financial expert disclosure in its proxy or information statement and incorporate that disclosure into its annual report, but it is not required.
According to the SEC, the changes are only "technical corrections to clarify the rules as described in the original adopting release, and do not alter the forms in which the disclosure is required as described in the original adopting release."
NOTE: Please note that this is a summary of a proposed SEC rule, and should not be construed to be a complete or final rule, nor should it be construed to be legal guidance. Please refer to the SEC's Web site for updated and final rule information.
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