EuroSOX - The European Version of SOX

In the USA SOX and now the updated Federal Rules of Civil Procedure have been a fact of business life for many years now. Our own research show that Compliance and Risk has overtaken both Customers as well as Cost as a driver for investments. You can download the full report here, if you are a Professional member
In the European Community, a gathering of 26 sovereign States, the various countries have had their own individual laws for some time, or have modeled a compliance framework based on SOX. There is however a European law that will start coming in soon.

Started in 2003 as a 10 point plan by the European Commission as the 8th Directive, the first draft was published in March 2004. In June 2005 it was adopted by the Legal Affairs Committee and 2 years ago the European Parliament accepted it as a Directive. In April 2006 the final adoption of the 8th Directive was passed and now implementation into local law can go ahead.
It consists of in total 3 separate directives which are :

• 4th Directive 78/660/EEC ,
• 7th directive 83/349/EEC and
• 8th directive 84/253/EEC

which together are to safeguard shareholder’s investments, establish Corporate Governance, increase disclosure requirements and also establish separate audit committees.

The directives closely follow  the US regulations, as these affects only publicly traded  companies. It will still take up to 2 years before every countrys' regulations has been updated to reflect these directives in local law. By then every company has to be fully compliant, and if you are doing business in Europe or are traded at any of the many different European stock exchanges, then this is something that you need to look at and be aware of.

Here are 4 suggestions to follow:

• Get management to understand the requirements and buy into the necessity to be compliant
• Get the content of the directive formalized into your own internal procedures
• Establish a Governance Framework with clear policies and procedures
• Follow standards and additional guidelines wherever possible to minimize additional work needed

It may have taken a long time for this to become law, but that does not mean that it is not to be taken seriously. SOX never was just a US based regulation, but now there is a European Directive to follow. Get informed and don't get caught out.

by Hanns Köhler-Krüner