Sarbanes Oxley Section 402

It is a sox issue and section 402 applies.

Sarbanes oxley section 402. Section 402 this section prohibits companies from making loans to insiders. Among the reasons identified were concerns over the use of company funds to provide personal financing to insiders. July 30 2002 h r.

So called short title links and links to particular sections of the code will lead you to a textual roadmap the section notes describing how the particular law was incorporated into the code. Last month the sec issued a no action letter to a financial services firm that sheds light on the scope of the prohibition under section 402 of the sarbanes oxley act of 2002 which makes it. Generally it will be unlawful for an issuer to extend credit to any director or executive officer.

Prohibition on personal loans to executives. 745 enacted july 30 2002 also known as the public company accounting reform and investor protection act in the senate and corporate and auditing accountability responsibility and transparency act in the house and more commonly called sarbanes oxley sarbox or sox is a united states federal law that set new or. Section 402 that bans loans to directors and officers inserts this provision into section 13 of the securities exchange act and applies it to issuers as defined in section 2 of the sarbanes oxley act.

Section 402 of the sarbanes oxley act of 2002 was enacted to prohibit publicly traded companies from providing personal loans to directors and executive officers. Disclosures of transactions involving management and principal stock holders. The sarbanes oxley act of 2002 pub l.

Section 403 on august 27 2002 the sec adopted rules that accelerated deadlines and mandated electronic filing of disclosures of insider transactions in company stock. Sarbanes oxley act of 2002. Sox 402 codified as section 13 k of the securities exchange act of 1934 makes it unlawful for an issuer directly or indirectly to extend or maintain credit to arrange for the extension of credit or to renew an extension of credit in the form of a personal loan to any of its directors or executive officers.

Enhanced conflict of interest provisions.