Any SOX issue if accept sponsorship of gifts from Suppliers? 1938

  • Hi All,
    I’m new to posting in this forum. I’m in charge of Compliance in my company which has to satisfy SOX requirements. Recently during a meeting to organize the upcoming Company Dinner and Dance, one Organizing Committee member inquired if it is SOX compliant to accept Sponsorship of gifts from our Suppliers if we request them to sponsor through invitation letters.
    I browsed through our Code of business conduct and it prescribes that 'Gifts from our Suppliers within the context of business relationships or activities should NOT be accepted directly or indirectly, if they could be considered ‘extravagant’ '. So the definition of ‘extravagance’ is not totally clear here. I’m thinking of proposing to the managment to set a ceiling or cap to define how much it would be reasonably concluded to be ‘extravagant’. Say, only any amount above USUSD5,000 would be considered extravagant.

    Any views from the floor or you guys have similar experiences to share?
    Much appreciated. Thanks

  • I think that your suggestion (in your case) to set up the ceiling is good point and easiest way.
    But in general, just my point of view, it is not neccesary to set up the ceiling. The gift could be so high that does not couse any doubt for corruption.
    It must be documented that your company received any sponsorship; who received, who sent the sponsorship, when, for what reason, amount of the sponsorship and everythin must be disclosed.
    If any employee received any gift he/she could inform about that his/her supperior(manager). And if there is any doubt for accepting the gift it is better to ask sox manager and the companys lawyer. …
    …What is extravagant for any employee it could not be extravagant for top manager.
    Maybe it helps may not.
    I am interested who else what will write

  • Generally, I think extravagant means a gift other than something like a bottle of wine, diary or pen.
    In other words, the gift should not be over a certain value, and, in the context of wine, it should not be something that is rare and valuable.
    This is because such gifts could be deemed as bribery and may lead to preferential business with certain customers/ suppliers.

  • Not really a Sox issue but it is wise for a code of conduct to specify this in more detail.
    My company keeps a gifts register. All gifts over a nominal value should be declared and over a certain value should be declined. We are required to register declined gifts as well as accepted ones.

  • Thanks for your replies Guys.
    I had a word with the Organizing Committee member. We established that any gifts from Suppliers with value amounted to more than USUSD2,000 will be deemed ‘Extravagant’ in this context. This will be documented in the form of the Minutes of Meeting of the Dinner and Dance (‘D-and-D’) Organizing Committee.
    Another question, the act of our solicitation or invitation to our Suppliers to sponsor the gifts for our D-and-D does it arouse any potential SOX compliance issue specifically with regards to the Code of Ethical behaviour?

  • I wouldn’t say so.
    It would advisable to ensure that all gifts and sponsorships are recorded in a transparent manner.
    As Dennis stated, it’s not really a SOX issue. This is probably because the sponsorship is at Entity level as opposed to individual level
    I do think it could turn into one, however, if individuals in your company were receiving gifts valued at USD2k from suppliers.

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