SEC Extends Compliance Date for Non-Accelerated Filers and Foreign Private Issuers Regarding Internal Control Over Financial Reporting Requirements
 
March 17, 2005
 

On March 2, 2005, the Securities and Exchange Commission (SEC) further extended the compliance dates for non-accelerated filers.[1] and foreign private issuers.[2] regarding certain amendments to Rules 13a-15 and 15d-15 under the Exchange Act, Items 308(a) and (b) of Regulations S-K and S-B, as well as the corresponding provisions in Forms 20-F and 40-F.[3] The amendments require companies, other than registered investment companies, to include in their annual reports a report by management regarding the company’s internal control over financial reporting requirements, to evaluate any change in the company’s internal control over financial reporting that occurred during the period and to provide an accompanying auditor’s attestation report on management’s assessment of the company’s internal control over financial reporting.

Under the latest extension, a non-accelerated filer, or a foreign private issuer filing its annual report on Form 20-F or 40-F, must begin to comply with the internal control over financial reporting requirements for its first fiscal year ending on or after July 15, 2006. These filers must comply with the provisions of Exchange Act Rules 13a-15(d) or 15d-15(d) regarding an evaluation of changes to internal control over financial reporting requirements in their first periodic report due after the first annual report that includes management’s report on internal controls over financial reporting.

The Commission also extended the compliance dates for non-accelerated filers and foreign private issuers to the amended portion of the introductory language in paragraph 4 of the certification required by Exchange Act Rules 13a-14(a) or 15d-14(a) regarding a certifying officer’s responsibility for establishing and maintaining internal control over a company’s financial reporting, as well as paragraph 4(b) regarding evaluation of the effectiveness of the issuer’s controls and procedures. The amended language must be provided in the first annual report and in all subsequent periodic reports of the non-accelerated filer, or foreign private issuer, and is required to contain management’s internal control report.

One important caveat to these extensions is that they apply only to those issuers who are non-accelerated filers in 2005 and will remain non-accelerated filers throughout the remainder of fiscal year 2005. If a non-accelerated filer subsequently satisfies the criteria to be an accelerated filer in 2005, the extension will no longer be available.

This Public Companies Alert is a summary for general information and discussion only. It is not a complete analysis of the matters presented and may not be relied upon as legal advice which may often turn on specific facts. Readers should seek legal advice before acting with regard to the matters mentioned herein.

For more information, contact any of the following Holland & Knight attorneys:

Atlanta
Don Kennicott • don.kennicott@hklaw.com
404 817 8500

Boston
Richard Yanofsky • richard.yanofsky@hklaw.com
617 523 2700

Jacksonville
Jim Main • james.main@hklaw.com
904 353 2000

Miami
Rod Bell • rodney.bell@hklaw.com
305 374 8500

New York
Frode Jensen • frode.jensen@hklaw.com
212 513 3200

Orlando
Tom McAleavey • tom.mcaleavey@hklaw.com
407 425 8500

Portland
Mark von Bergen • mark.vonbergen@hklaw.com
503 243 2300

Tampa
Bob Grammig • robert.grammig@hklaw.com
813 227 8500

Washington, D.C.
Jonathan Wolcott • jonathan.wolcott@hklaw.com
202 955 3000

West Palm Beach
David Perry • david.perry@hklaw.com
561 833 2000

1. As defined in Exchange Act Rule 12b-2, an “accelerated filer”
is a company that (i) has a public float of at least $75 million; (ii) has been subject to the SEC’s periodic reporting requirements for at least 12 months and has filed one annual report; and (iii) is not eligible to use the SEC’s small business reporting forms. By contrast, a non-accelerated filer does not meet these requirements and is not required to file its annual and quarterly reports on an accelerated basis.

2. As defined in Rule 405 of the Securities Act, a foreign private issuer is any foreign issuer other than a foreign government except an issuer meeting the following conditions: (1) more than 50 percent of the outstanding voting securities of such issuer are directly or indirectly owned of record by residents of the United States; and (2) any of the following: (i) the majority of the executive officers or directors are United States citizens or residents; (ii) more than 50 percent of the assets of the issue are are located in the United States; or (iii) the business of the issuer is administered principally in the United States.

3. The full text of the Release can be found at http://www.sec.gov/rules/final/33-8545.htm.