Compatibility with German Law 1077
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I am trying to figure out major differences in the German law and Sarbanes-Oxley. Can somebody help?
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In all liklihood there probably isn’t an equivalent law to Sarbanes-Oxley in Germany at present. However, there is an imminent/recent EU Directive that addresses the same issues - this will have to be incorporated into German law soon.
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In all liklihood there probably isn’t an equivalent law to Sarbanes-Oxley in Germany at present. However, there is an imminent/recent EU Directive that addresses the same issues - this will have to be incorporated into German law soon.
Actually I am trying to find out what major problems German companies encounter when are trying to comply with both laws at the same time?
Do you know where can I find more information concerning the recent EU Directive?
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I can try to address some of the differences that I have found out so far.
- Aktiengesetz or Corporate Law in Germany has a dual board system: Aufsichtsrat (AR) and Vorstand. While AR has an oversigth function only , Vorstand is responsible for the company management. Now, SOX requires a company to establish an audit committee that comes close to the definition of the AR, but not fully. First, the audit committtee has gained significant new tasks and rights thanks to SOX that an AR does not have. Also, an audit committee needs to be composed of external directors only. In Germany, there is an obligatory (legislative requirement) amount of employees’ representatives that have to be in the AR as well - and they do not match the definition of SOX independence for committee members.
- Wirtschaftsprüfergesetz or Audit Law (.?): in Germany, there is a secrecy or confidientality paragraph that prohibts an audit firm to disclose information about a client that it obtained during an audit of financial statements. SOX opposes this paragraph by giving the PCAOB the authority to disclose the audit documents to the SEC, if required.
These are only few of the incompatibilities, but the most commonly listed ones. Hope I could help.
Regards.
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Thank you for your help. This helps me.