THE LONDON TIMES: Firms ‘ready to delist from US’ over governance rules: “UP TO 60 European companies are ready to drop their US listings, Sir Digby Jones, Director-General of the CBI, said yesterday as he called on America to unravel its stringent laws on corporate governance.”: “There are 113 UK companies with dual listings, including AstraZeneca, GlaxoSmithKline and Royal Dutch/Shell.” (ShellNews.net) 27 Jan 05
By Tom Bawden
January 27, 2005
UP TO 60 European companies are ready to drop their US listings, Sir Digby Jones, Director-General of the CBI, said yesterday as he called on America to unravel its stringent laws on corporate governance.
Sir Digby’s comments to The Times came a day after the US Securities and Exchange Commission (SEC) pledged to make it easier for foreign companies to escape the huge costs of complying with the Sarbanes-Oxley governance rules by relinquishing their US listing.
The CBI chief welcomed the SEC’s comments and said that 25 European companies, most of them British, had since told him that they planned to delist from US bourses such as Nasdaq and the New York Stock Exchange. There are 113 UK companies with dual listings, including AstraZeneca, GlaxoSmithKline and Royal Dutch/Shell.
But Sir Digby, who expects Sarbanes-Oxley eventually to force up to 60 European companies to drop their US listings, attacked the SEC, casting doubt on whether the US stock market regulator would honour its pledge, and accusing it of corporate imperialism.
He said: “It is not what you say that matters, but what you do. We want to see the SEC do it, because it has not yet given us the details.
“Globalisation does not mean Americanisation, and although the US is trying to behave like a free market, it has a long way to go yet.”
Sir Digby, who is leading a pan-European lobbying campaign against Sarbanes-Oxley, also called for some of the regulations’ requirements to be dropped as part of a “mutual recognition” of the various regional corporate governance regimes to which multinationals must adhere, at considerable time and expense.
He said: “If a company is obeying Brussels’ laws, surely Washington can see a way towards some kind of common compliance. But while Brussels is very keen on this idea, Washington isn’t.”
The most controversial part of Sarbanes-Oxley, section 404, is due to be introduced in Europe in November or December and requires companies to admit to any shortcomings in their accounting procedures that could lead to inaccurate reporting.
The SEC indicated on Monday that it would overturn the rule that a delisted foreign company must continue to be registered with the SEC — and therefore to abide by Sarbanes-Oxley — unless it can prove it has fewer than 300 American shareholders, which is virtually impossible.
Overturning that rule would increase the incentive for companies with few American shareholders to quit the US exchange and avoid compliance costs, which Sir Digby estimates at about $10 million (£5.3 million) for the average company.
But for some British companies the costs of complying with Sarbanes-Oxley will be much higher.
BP, the oil giant and Britain’s biggest company, for example, expects to spend up to $125 million (£67 million). British Telecom has put the figure at about £10 million.