Sarbanes-Oxley And Revised Listing Standards:Implications For Private Equity Funds (Update)
To keep one apprised of recent developments in corporate governance legislation, this article contains revised information regarding the impact on private equity funds and their sponsors of some of the key provisions of the Sarbanes-Oxley Act. It has also proposed changes to the listing standards of the New York Stock Exchange (NYSE) and the NASDAQ Stock Market. Private equity funds often seek board representation in connection with their investments in order to play a more active role in the Portfolio Company?s management, strategic development and direction. Some of the provisions, which have been discussed, include: which portfolio companies are covered? Board composition board of directors - who is ?independent?? Audit committee standards and responsibilities etc. Thus, in light of the foregoing, for portfolio companies, private equity funds need to consider the ramifications of sitting on boards, and minority investors may need to give greater consideration to receiving either observer rights in lieu of board seats or observer rights that can convert into board seats.