How does Sarbanes-Oxley affect family businesses?
The Sarbanes-Oxley legislation of 2002 addressed effective corporate governance of public companies. The government, industry, and stakeholders have clearly indicated that private companies and non-profits should also strive to meet these higher expectations. Several sections of Sarbanes-Oxley apply now to private companies: Section 802 deals with tampering with evidence to impede an investigation or bankruptcy; Section 904 imposes increased fines and penalties for ERISA violations; and Section 1107 provides sanctions against improper treatment of “whistleblowers”. Family businesses, no less than any other business today, must carefully examine their current practices with the overriding objectives of moving toward compliance with the conflict of interest and audit provisions of Sarbanes-Oxley, establishing policies of transparency and disclosure, and adhering to a code of ethics.
