As passed by Congress, SOX consists of 68 sections spread over 66 pages of small type. The act prescribes auditor behavior, analyst behavior, corporate employee and officer behavior, and establishes rules to follow and an oversight board for monitoring financial statements. The Act closes with a set of draconian punishments for those who violate its provisions, including prison terms and fines of up to $25 million. Non-public companies need to be aware of the impact of the Sarbanes-Oxley Act on their business decisions. “These funds have enhanced the company’s financial flexibility, ” chief financial officer Christopher T. Scanlon said during an earnings call a few days later.
The standards required by SOX for public firms are standards that every non-public firm shareholder should embrace. Those standards provide the minimum financial protections that an investor should enjoy a financial report that has been reviewed by a knowledgeable officer and internal controls that protect the integrity of the financial statements. The audit committee is ultimately responsible for the financial records of the company and for the firm’s audited financial statements. SOX has many sections that deal with issues not strictly relevant to non-public businesses. SOX also contains two sections, Titles III and IV, that are directly relevant to all entities. The sections below deal with the important standards from Titles III and IV.
The good news regarding SOX is that its provisions apply only to businesses required to be registered with the Securities and Exchange Commission. In addition, SOX prescribes more rigorous and formal corporate controls over the finances of the company that would have discouraged misbehavior.
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In January, Strata disclosed it had refinanced a $7. 25 million bank loan. “This refinancing and new commercial bank loan facility is a testament to our financial strength and ability to generate cash flow, ” CEO Dolev Rafaeli said at the time. Facing public backlash, some companies have said they will return the loans. Besides national chains such as Shake Shack, Pennsylvania companies such as Yardley-based Optinose Inc. and Harrisburg-based Hersha Hospitality Trust said they would return the money. “The purpose of this program was not social welfare for big business, ” Mnuchin said on CNBC. On April 2, the CEO of Windtree Therapeutics, a biotech and medical-device company, boasted of “tremendous progress” the company made in 2019, capped by a December stock sale that netted the Bucks County firm $23 million. With nearly 750 professionals across the Southeast, Elliott Davis ranks among the top forty accounting firms in the United States.
“Think about a situation where Facebook goes public, and Mark Zuckerberg is selling his own shares into the offering, ” Chen says. ” This doesn’t mean you won’t eventually be able to sell your holdings, but it does mean you will likely have to wait.