Author:  Timothy M. Sullivan

Summary
On January 15, 2003, the SEC adopted rules requiring companies, other than registered investment companies, to include two new types of disclosures in their annual reports filed pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”):

• The rules require a company to disclose whether it has at least one “audit committee financial expert” serving on its audit committee, and if so, the name of the expert and whether the expert is independent of management. A company that does not have an audit committee financial expert must disclose this fact and the reasons therefor (Section 407 of the Act).
• The rules require a company to disclose whether it has adopted a code of ethics that applies to the company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A company disclosing that it has not adopted such a code must disclose this fact and the reasons therefor. A company also will be required to promptly disclose amendments to, and waivers from, the code of ethics relating to any of those officers (Section 406 of the Act).

To accommodate the filing requirements of these new rules, the SEC also amended Form 8-K, Form 10-K, Form 10-KSB, Form 20-F and Form 40-F under the Securities Exchange Act of 1934 (the “Exchange Act”), Regulation S-B, and Regulation S-K on January 15, 2003. (The Release discussing these new rules and amendments was issued on January 23, 2003.)

Additional comments have been requested regarding the appropriate treatment of foreign private issuers in light of the proposed rules implementing Section 301 of the Act.

Dates
Effective Date: March 3, 2003.
Compliance Dates:   Code of Ethics. Companies must comply with the code of ethics disclosure requirements promulgated under Section 406 of the Act in their annual reports for fiscal years ending on or after July 15, 2003. They also must comply with the requirements regarding disclosure of amendments to, and waivers from, their ethics codes on or after the date on which they file their first annual report in which the code of ethics disclosure is required. Audit Committee Financial Expert.  Companies, other than small business issuers, must comply with the audit committee financial expert disclosure requirements promulgated under Section 407 of the Act in their annual reports for fiscal years ending on or after July 15, 2003. Small business issuers must comply with the audit committee financial expert disclosure requirements in their annual reports for fiscal years ending on or after December 15, 2003.
Comment Date: Comments regarding treatment of certain foreign private issuers should be received on or before February 18, 2003.

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