By Matthew D. Latimer and Douglas J. Morrill
Overview
On January 8, 2003, the Securities and Exchange Commission (the "SEC") voted unanimously to propose new regulations (the "Proposed Rules") mandating, among other things, that listed companies' audit committees create anonymous internal complaint procedures.
The rules implement Section 301 of the Sarbanes-Oxley Act of 2002 (the "Act") and direct the national securities exchanges and national securities associations (collectively, the Self Regulatory Organizations ("SROs")) to prohibit the listing of any security of an issuer whose audit committee is not in compliance with the five requirements established by the Act. The creation of an anonymous internal complaint procedure is one of these five requirements. The rules also specify required levels of board audit committee independence, including the authority to retain and fund an independent accountant or outside advisors.
