SEC Gives Small Public Cos Extension On Securities Law

The Securities and Exchange Commission will give the smallest public companies extra time to comply with the final portion of Sarbanes-Oxley.

Such companies must now begin complying within nine months with a provision in the law, known as Section 404, requiring them to report on the effectiveness of their internal controls. Previously, the companies were to begin complying by Dec. 15. The extension will apply to companies with a public float below $75 million.

The reprieve comes after pressure from Capitol Hill to delay the new reporting requirements. The SEC said it decided on the extension after issuing a new study on the compliance costs of the change, which it indicated the smallest companies would need time to review.

“Now that the SEC has finally produced this report, it should use this information to implement the law in a way that doesn’t harm small companies that are already struggling to survive the worst economic contraction in decades,” Rep. Nydia M. Velazquez, D.-N.Y., the chairman of the House Small Business Committee, said in a statement.

SEC Chairman Mary L. Schapiro warned that this would be the last extension. “Since there will be no further Commission extensions, it is important for all public companies and their auditors to act with deliberate speed to move toward full Section 404 compliance,” she said in a statement.

-By Jessica Holzer, Dow Jones Newswires; 202-862-9228; jessica.holzer@dowjones.com

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