SOX Compliance requirements before going public 1909

  • My company is currenntly private, but planning to go public and list in NYSE. How many fiscal years in advance should it accomplish SOX compliance before it goes public? Can someone please answer my question? Thanks.

  • I believe that you do not have to be compliant in advance, it would be the first year-end afterwards.

  • From the SEC’s proposed amendments:
    ‘…Under the new amendments, a [newly public] company will not become subject to these requirements until it either had been required to file an annual report for the prior fiscal year with the Commission or had filed an annual report with the Commission for the prior fiscal year. A newly public company is required to include a statement in its first annual report that the annual report does not include either management’s assessment on the company’s internal control over financial reporting or the auditor’s attestation report.’

  • Part of the cost of being a public company is maintaining effective ICOFR. Even though you are not required to be SOX-compliant when you go public, I would see this as a positive thing. There are many regulatory requirements related to being a publicly-traded company. All of these will be new to your organization. I would suggest trying to get SOX-compliancy out of the way early so that you do not stumble over it along with all of the other new requirements that you will be trying to comply with. This allows you to go through the SOX motions your first year as a public company even though you do not need to make the ICOFR assertions until year 2.
    Sooner is better.

  • Thank you very much for your detailed answers, Denis, Albie and Kymike. It was very useful.

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