What Every Public Company CEO Should Know About Transparency and SOX Compliance for Corporate Websites

Minding your URL: Upon signing into law the Sarbanes-Oxley Act of 2002, President Bush characterized it as “the most far reaching reforms of American business practices since the time of Franklin Delano Roosevelt.” Among other things, the Act mandated certain reforms to enhance corporate responsibility and enhance financial disclosures. Is your company compliant?

Section 403: Disclosures of Transactions Involving Management and Principal Stakeholders Sarbanes-Oxley
Section 403 amends Section 16 of the Securities and Exchange Act of 1934 by requiring public companies to post on the corporate website all Forms 3, 4 and 5 filed with respect to the company’s equity securities by the end of the business day after filing. All beneficial owners maintaining more that 10% of a registered equity security including, but not limited to, principal stockholders, officers, and directors, are required to file electronic statements with the SEC. The company can satisfy the SEC’s requirements by providing direct access to the Forms 3, 4, and 5 or by hyperlinking to the reports via a third-party service instead of maintaining the forms itself. The SEC rule is very specific about conditions that must be met with regard to timeliness of posting, display format, retrieval of all information including exhibits and attachments and ease of access. Shareholder Transparency and Best Practices Providing the information investors expect goes a long way to building credibility with shareholders and potential investors alike.

Section 406: Code of Ethics for Senior Financial Officers
Section 406 directs public companies to disclose whether it has adopted a code of ethics for its senior financial officers, applicable to its principal financial officer and comptroller or principal accounting officer, or persons performing similar functions. The SEC further requires a company disclose any reasons for not having such code of ethics as well as any changes to, or waiver of any provision of, that code of ethics.