Sarbanes Oxley Law, more commonly known as SOX, is a popular legal tool to ensure that the correct measurement of governance is filled in the operation to avoid the scam companies or misreporting. In fact, the issues of law that is much larger and more diverse, yet potentially goal is to reduce any illegal activities in the business area by tightening the grip of the law on activities, especially financial issues.
Claims Act implementing strong internal controls are simple and straightforward. Assessing their strengths and weaknesses, with regular reporting, prevent frauds and scams because of misrepresentation or misreporting. To sum up, “corporate transparency” is the key mantra
The Act :.
Different parts cater to the different areas of activity and the establishment – all ultimately aimed at limiting illegal Entertainment. For example, several chapters, like 302, 404, and 409, dealing with information technology elements.
Sox put great emphasis on the policy on disclosure of information. It has been observed that the biggest scandals have been energized by the potential of the company to hide information or to submit partial information to disorient shareholders and other concerned parties. Therefore, as mandated by the sections of the Act, companies need to be more transparent in their activities on both micro and macro levels.
Sox put the responsibility of the vehicle owner and not the driver. All important certificates and information are assigned to be principal officers concerned. Implicit sanctions and subsequent enforcement actions are most strongly felt by business leaders. You can no longer escape charges by allowing younger manager.
The scope of coverage extends beyond the physical borders of the United States. It regulates the operations of foreign companies listed on US stock exchanges.
Act is rather known for its tight deadlines and effective punishment and enforcement impact.
Given the sharp increase in fraud activity and intractability their Sox aims to keep track of internal work patterns and company guidelines on disclosure. Keeping the same in mind, the law mandates the highest officials including CEO to certify the information made public.
While legally binding only for public companies, if could have a positive impact private companies’ overall operations and operational capabilities.
Quick Note: This article is intended to provide only a summary of the advantages and disadvantages of the Sarbanes Oxley Act applicable to limited liability companies. However, the exact consequences and rules must be carefully reviewed and applied to avoid legal mishaps. Furthermore, it is recommended to seek guidance for the Sox accordance daily operations.