Conflict between German law and Sarbanes-Oxley 1141

  • I have two questions regarding the implementation of Sarbanes-Oxley in Germany.
    First, I would like to know who signs of on the reports. In Germany the management board is responsible but Sarbanes-Oxley requires the CEO and CFO to sign of. How do German companies solve this issue? Did the SEC mention something concerning that?
    Second, what is about the confidentiality of documents? The Audit Law does not permit do disclose any confidential information. How is this problem solved? Or is it not solved?

  • German law does not govern the filings of public documents with the SEC in the USA.
    What confidential information is disclosed under SOX? Why would this be an issue? The SEC in the USA does not require companies to disclose information that would be a trade secret. On the other hand, a public company owes it’s investors (owners) full disclosure as to the financial information about the business they own.

  • I agree with kymike.
    The disclosure of information, much of which would be used for internal management purposes, is always a security issue - do not forget the competitive implications that could arise through the disclosure of confidential information.
    Yes, disclosures are necessary for the operation of market discipline.
    No, you are not required to disclose proprietary information. There is a balance between the need for disclosure and the principles of substantiality and of the protection of confidential information.
    For Basel II compliance, banks must disclose more general information, together with an explanation of why specific items can not be disclosed.
    In SOX, we have several serious confidentiality issues. For example:

    1. The transfer of customer financial information to a service provider introduces the risk of potential violations of confidentiality. Again, policies, procedures, controls etc.
    2. Companies need to have in place whistleblower policies under section 806 of Sarbanes-Oxley. It is not easy to maintain the confidentiality and anonymity of such submissions. In order to conduct an effective investigation, it may not be possible to maintain confidentiality and anonymity - BE CAREFUL, INCLUDE IT IN YOUR POLICIES
    3. The principle of confidentiality is of paramount importance between the attorney and the client: The attorney-client privilege applies in judicial and other proceedings in which a lawyer may be called as a witness or otherwise required to produce evidence concerning a client
      On January 29, 2003, the SEC published final rules pursuant to Section 307 of the Act. These have established standards of professional conduct for attorneys representing companies before the SEC. According to these rules, the client is the issuer, not its officers or directors. The rules require an attorney to report evidence of a material violation up-the-ladder

Log in to reply