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SEC Adopts Measures to Certify Management Investment Company
Shareholder Reports
FOR IMMEDIATE RELEASE
2003-8
Washington, D.C., January 22, 2003 — The Securities and
Exchange Commission today approved the adoption of rule and form
amendments that implement the certification requirement of Section 302 of
the Sarbanes-Oxley Act of 2002 with respect to registered management
investment companies. The amendments will require mutual funds and other
registered management investment companies to file shareholder reports on
Form N-CSR and will require each registered management investment
company's principal executive and financial officers to certify the
information contained in these reports in the manner specified by Section
302. In addition, the Commission voted to adopt rule and form amendments
that will require mutual funds and other registered management investment
companies to include new disclosures on Form N-CSR and Form N-SAR in order
to implement the "code of ethics" and "financial expert" disclosure
requirements of Sections 406 and 407 of the Sarbanes-Oxley Act of
2002.
The amendments that the Commission approved include the following.
- Certified Shareholder Reports on Form N-CSR. The amendments
will require mutual funds and other registered management investment
companies to file certified shareholder reports with the Commission on
new Form N-CSR. The amendments will also designate these certified
shareholder reports as reports that are required under Sections 13(a)
and 15(d) of the Securities Exchange Act of 1934.
- Disclosure Controls and Procedures. The amendments will
require registered management investment companies to maintain, and
regularly evaluate the effectiveness of, controls and procedures
designed to ensure that the information required in filings on Form
N-CSR is recorded, processed, summarized and reported on a timely
basis.
- Replacement of Certification Requirement on Form N-SAR. The
amendments will replace the certification requirement of Form N-SAR for
registered management investment companies with the certification
requirement in Form N-CSR. This will better implement the certification
requirement of Section 302 of the Sarbanes-Oxley Act of 2002 because the
requirement was intended to improve the quality of the disclosure that a
company provides about its financial condition in its periodic reports
to shareholders. For registered management investment companies, the
required reports to shareholders will be contained in Form N-CSR, rather
than Form N-SAR, which is primarily a regulatory reporting form for use
by the Commission in its inspection and compliance programs.
- Code of Ethics Disclosure. The amendments will implement
Section 406 of the Sarbanes-Oxley Act with respect to registered
management investment companies by requiring a registered management
investment company to disclose whether it has adopted a code of ethics
that applies to its principal executive officer and senior financial
officers or persons performing similar functions. If it has not, the
investment company will be required to explain why it has not. The
amendments will also require an investment company to disclose
amendments to, and waivers from, the code of ethics relating to any of
those officers. These disclosure requirements will be similar to those
that the Commission adopted last week for operating companies.
- "Audit Committee Financial Expert" Disclosure. The amendments
will implement Section 407 of the Sarbanes-Oxley Act with respect to
registered management investment companies by requiring a registered
management investment company to disclose whether it has at least one
"audit committee financial expert" serving on its audit committee, and
if so, the name of the expert and whether the expert is independent of
management. An investment company that does not have an audit committee
financial expert will be required to disclose this fact and explain why
it has no such expert. These disclosure requirements will be similar to
those that the Commission adopted last week for operating
companies.
These measures will be effective 30 days after their publication in the
Federal Register.
* * *
The full text of detailed releases concerning each of these items will
be posted to the SEC Web site as soon as possible.
http://www.sec.gov/news/press/2003-8.htm
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