The Challenges Of Being A Public Company In 2009: An Overview Of Recent Developments

The Challenges Of Being A Public Company In 2009: An Overview Of Recent Developments - 5/28/2009

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The Challenges Of Being A Public Company In 2009: An Overview Of Recent Developments
Cornell Wright

Mondaq. May 28, 2009
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EXCERPT: Originally published in the 2009 edition of The Canadian Legal Lexpert Directory. Canadian companies and their directors and officers are facing intense scrutiny from regulators, stock exchanges, institutional investors, shareholders and the media. Regulators in both Canada and the United States have been very active in imposing new governance and disclosure requirements and are increasingly vigilant in enforcing those requirements, particularly in the wake of the recent financial market turmoil. In addition, directors' duties, conflicts of interests and processes of deliberation are being scrutinized more closely by investors and the courts, significantly increasing the exposure of directors to lawsuits and potential liability. These developments, and others, have created new risks for Canadian public companies and their directors and officers. Canadian securities regulators have adopted a number of rules to strengthen investor confidence in the public filings of companies. The Canadian rules are substantially similar to comparable provisions of the US Sarbanes-Oxley Act of 2002 (S-Ox) and US stock exchange requirements. Some of the measures have been phased in over time, and certain companies (e.g., foreign and venture issuers) receive slightly different treatment. Highlights of these initiatives are discussed below. The CEO and CFO of every public company are required to personally stand behind financial statements and other documents. They must personally certify several aspects of the company's disclosure: integrity of interim and annual filings; design and evaluation, and disclosure of conclusions as to the effectiveness, of disclosure controls and procedures; and design of, and disclosure of material changes in, internal control over financial reporting. In addition, beginning with periods ending on or after December 15, 2008, the CEO and CFO of every public company (except investment funds) are required to provide expanded certifications with respect to its internal control over financial reporting (ICFR).

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