SOX Prohibition on Loans to Officers and Directors

On March 4, 2013, the SEC issued a no-action letter in response to a request for interpretive guidance regarding the applicability of Section 402 to a program that would allow directors and executive officers to obtain credit utilizing equity grants made by a public company issuer. Here's what this means.

18 minute read May 24, 2013 at 01:31 PM
By
Laura P. Washburn
SOX Prohibition on Loans to Officers and Directors

Since the adoption of the Sarbanes-Oxley Act (SOX) in 2002, public companies and their advisers have been seeking guidance on Section 402 of the Act (codified as Section 13(k) of the Securities Exchange Act of 1934, as amended), which imposed a prohibition on public companies extending loans to their directors and executive officers.'

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