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It’s the name of a piece of U.S. compliance legislation, with global implications, which was signed off in 2002. A key section, Section 404, went live on Nov. 15. It’s designed to prevent financial malpractice and accounting scandals such as the Enron debacle. It’s also known as the Public Company Accounting Reform and Investor Protection Act. The shorter moniker comes from the names of Sen. Paul Sarbanes, a Democrat from Maryland, and Rep. Michael Oxley, R-Ohio, who are credited as the main architects of the Act. It’s becoming known as SOX or SarbOx or SOA.

The Act covers a whole range of governance issues, many covering the types of trade that are allowed within a company, with an emphasis upon keeping everything above board. For example, the Act forbids personal loans to officers and directors. Former WorldCom boss Bernie Ebbers had taken considerable loans from his company shortly before it became the center of a corporate scandal. Other measures regulate the responsibilities of audit committees sent in to check the health of companies’ compliance. The Act also offers protection to whistleblowers.

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