[Federal Register Volume 68, Number 61 (Monday, March 31, 2003)]
[Rules and Regulations]
[Pages 15353-15354]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-7680]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 228 and 229

[Release Nos. 33-8177A; 34-47235A; File No. S7-40-02]
RIN 3235-AI66


Disclosure Required by Sections 406 and 407 of the Sarbanes-Oxley 
Act of 2002; Correction

AGENCY: Securities and Exchange Commission.

ACTION: Corrections to final regulations.

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SUMMARY: We are making technical corrections to rules adopted in 
Release No. 33-8177 (January 23, 2003), which were published in the 
Federal Register on January 31, 2003 (68 FR 5110). The rules implement 
sections 406 and 407 of the Sarbanes-Oxley Act of 2002 by requiring 
disclosures regarding audit committee financial experts and codes of 
ethics. This document amends an instruction to the rule to clarify that 
disclosures regarding audit committee financial experts are required 
only in annual reports.

EFFECTIVE DATE: March 31, 2003.

FOR FURTHER INFORMATION CONTACT: Ray Be, Special Counsel, Office of 
Rulemaking, Division of Corporation Finance, at (202) 942-2910, U.S. 
Securities and Exchange Commission, 450 Fifth Street, NW., Washington, 
DC 20549-0312.

SUPPLEMENTARY INFORMATION:

I. Background

    On January 23, 2003, the Commission adopted,\1\ among other things, 
amendments to item 401 of Regulations S-K and S-B.\2\ These rules 
require disclosure of whether a company has an audit committee 
financial expert, as defined in the rule, serving on its audit 
committee.
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    \1\ See Release No. 33-8177 (Jan. 23, 2003) (68 FR 5110).
    \2\ 17 CFR 229.401; 17 CFR 228.401.
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    Subsequent to the adoption of the amendments, questions arose 
regarding whether the disclosures required by the new disclosure item 
must be provided in registration statements under the Securities Act of 
1933 \3\ and the Securities Exchange Act of 1934.\4\ Although the 
discussion of these provisions in the adopting release makes clear that 
such disclosure is required only in a company's annual report, the new 
disclosure item did not clearly state that such disclosure is required 
only in annual reports.
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    \3\ 15 U.S.C. 77a et seq.
    \4\ 15 U.S.C. 78a et seq.
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    Accordingly, the amendments set forth in this document clarify that 
the rules require disclosure of whether a company has an audit 
committee financial expert serving on its audit committee only in an 
annual report. Although this disclosure is not required in any document 
other than the annual report, a company may, at its discretion, include 
the audit committee financial expert disclosure in its proxy or 
information statement and incorporate that disclosure into its annual 
report if it complies with applicable rules for incorporation by 
reference. The changes are technical corrections to clarify the rules 
as described in the original adopting release, and do not alter the 
forms in which the disclosure is required as described in the original 
adopting release.

II. Need for Correction

    As published, the final regulations contain errors which are in 
need of clarification.

III. Correction of Publication

    Accordingly, the publication on January 31, 2003, of the final 
rules (Release No. 33-8177) relating to the disclosure of whether a 
company has an audit committee financial expert serving on its audit 
committee and whether a company has adopted a code of ethics for its 
principal executive officer, principal financial officer, principal 
accounting officer and controller, which were the subject of FR Doc. 
03-2018, is corrected as follows:


Sec.  228.401  [Corrected]

    On page 5126, in the first column, paragraph 1 to Instructions to 
Item

[[Page 15354]]

401(e) of Sec.  228.401 is corrected to read as follows:
* * * * *

Instructions to Item 401(e)

    1. The disclosure under Item 401(e) is required only in a small 
business issuer's annual report. The small business issuer need not 
provide the disclosure required by this Item 401(e) in a proxy or 
information statement unless that small business issuer is electing to 
incorporate this information by reference from the proxy or information 
statement into its annual report pursuant to general instruction E(3) 
to Form 10-KSB.
* * * * *


Sec.  229.401  [Corrected]

    On page 5127, in the third column, paragraph 1 to Instructions to 
Item 401(h) of Sec.  229.401 is corrected to read as follows:
* * * * *

Instructions to Item 401(h)

    1. The disclosure under Item 401(h) is required only in a 
registrant's annual report. The registrant need not provide the 
disclosure required by this Item 401(h) in a proxy or information 
statement unless that registrant is electing to incorporate this 
information by reference from the proxy or information statement into 
its annual report pursuant to general instruction G(3) to Form 10-K.
* * * * *

    Dated: March 26, 2003.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 03-7680 Filed 3-28-03; 8:45 am]
BILLING CODE 8010-01-P