Is it reasonable to expect that private companies will some day become bound to comply with SOX?
No, it is doubtful that SOX will ever directly apply to private companies. Keep in mind, however, that we are undergoing a sea change in terms of the expectations of all players in the financial markets. Think about the fundamentals. In terms of state corporate law and principles of fiduciary duty, there is no fundamental distinction between publicly-held and privately-owned companies. While there has not yet been a wave of new state legislation, we have seen some. In California, we have seen the California Corporate Disclosure Act and SOX-based reform laws applicable to charitable corporations. As state corporate laws are amended in response to recent scandals, the standards for corporate decision-making will change. The scope of the business judgment rule will be modified and perhaps be narrowed under judicial interpretation. The point is that the new principles are in the air: SOX has promulgated new standards that will inevitably seep into state law. Q: Does SOX impact private comp
