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Sarbanes-Oxley, eh? Canada regulators roll out internal-controls rules

Sarbanes-Oxley, eh? Canada regulators roll out internal-controls rules

by Rick Turoczy on March 10, 2006

Canada’s public companies will have to tell investors how effective their internal controls over financial reporting are under stringent new rules proposed on Friday by securities regulators.

The rules, rolled out by the Canadian Securities Administrators — an umbrella group representing the country’s regulators — are similar to the controversial requirements of the U.S. Sarbanes-Oxley Act.

They will apply to all companies that trade on the Toronto Stock Exchange and the junior Venture market. A total of 3,765 companies are listed on the two exchanges.

The main difference between the Canadian and U.S. rules is that Canadian companies will not have to get an opinion from external auditors on their internal-controls reporting.

“It will likely save smaller Canadian corporations a substantial amount of money because auditors are costly,” said Philip Anisman, a veteran securities lawyer in Toronto. “It won’t affect the big, interlisted corporations that will have to comply with U.S. law.”

Large companies, including Canadian insurance giant Manulife Financial Corp., have complained about the regulatory burden imposed by Sarbanes-Oxley’s section 404, which concerns internal-controls reporting. Manulife Chief Executive Dominic D’Alessandro has called the provision “extraordinarily onerous” and said compliance could cost the company, which is listed in both the United States and Canada, as much as C$30 million ($26 million) a year.

The CSA said on Friday that the new requirements will have to be adopted for financial years ending on, or after, December 31, 2007.

Sarbanes-Oxley, eh? Canada regulators roll out internal-controls rules

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