Strict governance rules do not deter US listings: Oxley

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New Delhi , Mar 13 (UNI) The introduction of the Sarbanes-Oxley Act in 2002 has not put the United States (US) at a competitive disadvantage with its European counterparts, according to Michael Oxley, former US Congressman and co-author of the act, as he hoped more Indian companies will list at the NASDAQ.

''We presently have six Indian companies listed on the NASDAQ and we are in talks with more Indian companies to list at the NASDAQ,'' said Mr Oxley, who is also the Vice Chairman of Nasdaq, at the sidelines of a press conference organised jointly by the Institute of Company Secretaries of India and CII.

In response to a series of corporate scandals like Enron and WorldCom, Congressman Michael Oxley and Senator Paul Sarbanes sponsored the Sarbanes-Oxley (SOX) Act. Conceived as an investor protection law, this wide-ranging legislation impacted U.S. public companies in many ways.

Supporters of these reforms applaud SOX as necessary and useful, while critics have consistently voiced concerns over cost and resource requirements of compliance.

''Listing at the Nasdaq gives you a better access to the large pool of capital, the American markets and a 30 per cent premium on listing,''Mr Oxley said.

He, however, said NASDAQ was not looking at acquiring any stake in the Bombay Stock Exchange (BSE).

''We are providing BSE with the technology needed for trading and have just acquired Sweden's OMX bourses and we are in a digestive mode now,'' Mr Oxley said.

Last year NASDAQ Stock Market Inc acquired OMX AB for 25.1 billion Swedish kronor or 3.7 billion dollars.

Mr Oxley said that although there is evidence that some European financial markets are becoming increasingly attractive, the US is still regarded as the safest and fairest of international markets with the highest standards.

Mr Oxley also said that since the introduction of SOX in the US, many countries, both developed and developing, have moved towards higher standards of corporate governance and listing requirements.

The predicted 'race towards the bottom' that was widely predicted after the New York Stock Exchange and NASDAQ tightened their listing standards has failed to materialise.

''Frankly it has been mostly the opposite of what many predicted,'' said Mr Oxley. ''Other countries have stepped up and understood how important it is to have these kinds of standards and I will expect that this will continue apace and continue to pay great rewards.'' When asked whether he thought that SOX would stifle innovation on a long-term basis by limiting the ability of smaller, more innovative companies to access capital markets, Mr Oxley said ''SOX was to restore market confidence after around 8 trillion dollars were lost due to the scandals. Now we have excellent participation and the regulators have been given the flexibility to adapt to changing needs.'' We have made changes to the way Public Company Accounting Oversight Board (PCAOB) functions and smaller companies have been exempted for another year from complying with AS5. ''Most changes on cost effectiveness and flexibility has not been reported by the media,'' Mr Oxley said.

Speaking on the occasion Ministry of Corporate Affairs Joint Secretary Jitesh Khosla said ''as Indian companies grow bigger and extend wings overseas, issue of SOX will become increasingly important to.'' However, he said a balance of accountability, innovation and creativity has to be maintained.


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