Companies that fail to meet the audit committee requirements of the Sarbanes-Oxley Act would be prevented from listing any of their securities on US exchanges under a proposal that is to be considered by the Securities and Exchange Commission (SEC) next week.

Any such move would have a big impact on the ability of foreign companies to list their stocks and bonds on the New York Stock Exchange and other US exchanges.

The rules on audit committees at many European companies are different to those implemented under Sarbanes-Oxley.

The Act was signed by President George W Bush on July 30th last year in response to a wave of corporate fraud and false accounting disclosed by US companies such as WorldCom and Enron. Some of its measures have aroused strong opposition among foreign companies listed in the US, which claim they meet tougher boardroom standards than US counterparts.

Most European and Asian companies are expected to concur in meeting all the requirements of Sarbanes-Oxley. However, some Wall Street observers have said its measures could slow the number of foreign companies that come to New York for a listing.

The London Stock Exchange (LSE) has stepped up its marketing campaign in Asia to persuade companies there to list on the LSE because of its more flexible regulatory regime. - (Financial Times Service)