Remember grade school when the teachers would say that the one bad kid in the class ruined it for everybody? If you remember your days as a child you understand the impact of the ‘Public Company Accounting Reform and Investor Protection Act’, better known as the Sarbanes-Oxley act of 2002.
The likes of Enron and Tyko caused all of ethical, law-abiding companies to take on new and substantial expense in order to protect investors from the small percentage of companies out to mislead and misinform. If you’re considering taking your company public, consider the Frankfurt Stock Exchange where this law doesn’t apply.
Enacted in July of 2002, this new law, governed by the United States Security and Exchange, added a new level of expense and oversight to publicly traded companies. Or if you’ve considered becoming publicly all company ceo list traded, you now have even more expenses to add in to your IPO costs, not to mention the personal liability that is put on you, the CEO.
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Sarbanes-Oxley requires that any publicly traded company keep all company records for no less than five years. If you’re a CEO you may think that you are already in compliance but this includes all electronic records as well. How many employees do you have and how many e-mails do they generate each day?
These e-mails must be kept for no less than 5 years. Is your IT department large enough and experienced enough to archive these records properly? This could be a major company expense once the equipment and manpower are added up. Listing on the Frankfurt Stock Exchange allows you to avoid this law altogether.
The Buck Stops With You…and it May Cost You!
Section 302 of the Sarbanes-Oxley act allows the United States to impose civil and/or criminal penalties on a CEO who files inaccurate financial disclosure documents. Of course the CEO isn’t preparing these documents in most cases so he or she is relying on others to properly prepare all filings.
Sarbanes-Oxley requires the CEO to review these documents but finding unintentional errors or evidence of wrongdoing on the part of other employees would be quite difficult, and if the CEO misses a mistake it could mean civil or criminal penalties.
A 2007 study estimated that a company with $4.6 billion in revenue was paying $1.7 million to be compliant. As a CEO who may not run a company with billions of dollars in sales, you’re probably thinking that some of these costs are surely fixed costs so the percentage of revenue that is used to be in compliance with this law is probably higher as the market cap of the company goes down.
This is why many CEOs are electing to take their company public on the Frankfurt Stock Exchange or FSE. As the third largest exchange, a company can still easily raise the needed capital from the more than one hundred million active investors on the exchange. They can do it without the expense or liability of Sarbanes-Oxley and even better, a company can list on the FSE for a fraction of the cost and a fraction of the time.
If you’re considering taking your company public, consider the Frankfurt Stock Exchange and avoid the increasing complication and expense that comes from listing in The United States.
