This law, which creates huge burdens for public companies, fundamentally changes the economics of being public. Without suggesting that this is a complete list, the law requires the following:
- Whistle-blowing: the law requires that public companies create a process for employees to alert an independent member of the board of directors to any concerns
- Officer Certifications: CEOs and CFOs are now required to to certify, subject to civil and criminal penalties, that the financial statements are properly stated
- Internal Controls and Audits: the law set out new standards for internal controls and audits
- 404 Audits: section 404 of the law requires a thorough audit of the financial system and controls, typically at very high costs
- Ban on loans to officers: the law also bans loans to officers
Independent Board Members: the law requires a majority of independent board members for most companies- Independent Audit Committees: the law also creates standards for the audit committee, including a strict definition for financial experts serving on the committee
Simpler corporate governance is a big reason to go or remain private.
