Shock Therapy’ for Aktiengesellschaften: Can the Sarbanes-Oxley Certification Requirements Transform German Corporate Culture, Practice and Prospects?

Hollister, Hudson T. | January 1, 2005

The Sarbanes-Oxley Act (Act) of 20021 was the U.S. Congress’s hasty response to the wave of corporate scandals that had begun to devastate U.S. investor confidence during the previous year. Its sixty-six pages contain a wide range of measures designed to enhance the quality and independence of corporate audits and disclosure under the U.S. securities-regulation regime. The Act applies to public corporations-corporations that are required to file regular financial reports under the Securities Exchange Act of 1934 (Exchange Act). Objections from German corporations and observers were particularly vigorous. At least one German foreign private issuer registered with the SEC has since deregistered and left the U.S. regulatory regime. The implications and effects of the Act’s certification requirements for German foreign private issuers are in controversy.