Compliance issues - Public vs Private companies.

erinkuntz

Hi,

Can anyone tell me how being a privately held company vs
a publicly held company affects compliance issues?   I am
aware of what is expected as it relates to number of employees, is that
regardless of public/private?  Also, how does it relate to
Sarbanes - Oxley?  Do private companies have to be concerned with
SOX? 

 

Thanks 

regdunlop

publicly traded companies have more compliance requirements for sure. for example, there's sarbanes-oxley on ethics and exec comp disclosure requirements from the SEC. some privately held companies have followed the requirements as best practices.  both private and public companies abide by the same discrimination and wage and hour laws.

LadyAnn

To answer your last question directly: No, private companies do not have to be concerned with SOX. 

Other differences may include whether your financial statement is audited or just reviewed by an accountant; the relationship the BOD (Board of Directors) has to the company; as well as the internal procedures the company establishes.

I am currently a private held company whose parent corporation is in the process of going public.  The number of changes that we have had to go through in the past two years is absolutely incredible.  I went from being reviewed by one auditor at the end of every calendar year, to being audited every quarter!  Thankfully, I don't have to worry about SOX as of yet (my parent corporation is in Taiwan), but I'm not that far away from being compliant.

 

 

TXHRGuy

[quote user="LadyAnn"]

To answer your last question directly: No, private companies do not have to be concerned with SOX. 

[/quote]

 

This is not entirely true.  There are parts of SOX that pertain to all companies, not just publicly traded companies.  The most onerous bits are all about publicly held companies but there are pieces strewn throughout the act that pertain to all business entities.

Two important examples include the whistleblower protection and document retention parts, which  pertain to both public and private entities.

LadyAnn

Thanks for the clarification.