Composition of the audit committee: Ensuring members meet the new independence and financial literacy rules
- PDF / 107,187 Bytes
- 14 Pages / 595 x 765 pts Page_size
- 111 Downloads / 223 Views
Volume 2 Number 1
Composition of the audit committee: Ensuring members meet the new independence and financial literacy rules Adam O. Emmerich, Gregory N. Racz* and Jeffrey Unger Received: 23rd November, 2004 *Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, NY 10019, USA; Tel: +1 212 403 1339; Fax: +1 212 403 2339; E-mail: [email protected]
Adam O. Emmerich, a partner at Wachtell, Lipton, Rosen & Katz, is a member of the firm’s Corporate Department, focusing primarily on mergers and acquisitions and securities law matters. His practice has included a broad and varied representation of public and private corporations and other entities in a variety of industries throughout the USA and abroad, in connection with mergers and acquisitions, divestitures, spin-offs, joint ventures and financing transactions. He also has extensive experience in takeover defence and corporate governance issues. Gregory N. Racz, an associate at Wachtell, Lipton, Rosen & Katz, is also a member of the firm’s Corporate Department, focusing primarily on mergers and acquisitions and securities law matters. Jeffrey Unger is a third-year law student at the University of Pennsylvania.
ABSTRACT KEYWORDS: Audit Committee, independence, financial literacy, NYSE, NASDAQ
Responding to the corporate scandals that have recently dominated the front pages of US newspapers, the Sarbanes–Oxley Act, the Securities and Exchange Commission (SEC) and the major US securities markets have imposed a number of sweeping corporate
governance changes on public companies (including non-US public companies — so-called ‘foreign private issuers’) traded in the USA. Of special significance, the US federal securities laws and the major national securities markets now mandate that public companies possess audit committees composed of ‘independent’ members who meet exacting and specific criteria. Unfortunately, unlayering the various new and different corporate governance rules can be a complex and daunting task. In an effort to assist companies, including foreign private issuers, to understand and comply with these new rules — which are currently in effect for US companies and which will take effect no later than 31st July, 2005 for foreign private issuers — this paper provides a brief overview of key new requirements imposed by the Sarbanes–Oxley Act, and the SEC regulations promulgated thereunder, by the New York Stock Exchange (NYSE), and by the NASDAQ, including certain exceptions for foreign private issuers.
INTRODUCTION
The audit committee of a company publicly traded in the USA must be composed solely of directors who meet the listing standards for audit committee membership of the company’s particular US securities market, as well as the audit committee membership requirements under the US federal securities laws.
International Journal of Disclosure and Governance, Vol. 2, No. 1, 2005, pp. 67–80 © Henry Stewart Publications, 1746–6539
Page 67
Composition of the audit committee
FINANCIAL LITERACY AND FINANCIAL EXPERTISE
Financial literacy
Audit com
Data Loading...
