Section 301: Public Company Audit Committees.
Each member of the audit committee shall be a member of the board of directors of the issuer, and shall otherwise be independent.
“Independent” is defined as not receiving, other than for service on the board, any consulting, advisory, or other compensatory fee from the issuer, and as not being an affiliated person of the issuer, or any subsidiary thereof.
The SEC may make exemptions for certain individuals on a case-by-case basis.
The audit committee of an issuer shall be directly responsible for the appointment, compensation, and oversight of the work of any registered public accounting firm employed by that issuer.
The audit committee shall establish procedures for the “receipt, retention, and treatment of complaints” received by the issuer regarding accounting, internal controls, and auditing.
Each audit committee shall have the authority to engage independent counsel or other advisors, as it determines necessary to carry out its duties.
Each issuer shall provide appropriate funding to the audit committee.
Section 302: Corporate Responsibility for Financial Reports.
The CEO and CFO of each issuer shall prepare a statement to accompany the audit report to certify the “appropriateness of the financial statements and disclosures contained in the periodic report, and that those financial statements and disclosures fairly present, in all material respects, the operations and financial condition of the issuer.” A violation of this section must be knowing and intentional to give rise to liability.
Section 303: Improper Influence on Conduct of Audits
It shall be unlawful for any officer or director of an issuer to take any action to fraudulently influence, coerce, manipulate, or mislead any auditor engaged in the performance of an audit for the purpose of rendering the financial statements materially misleading.
Section 304: Forfeiture of Certain Bonuses and Profits.
Section 305: Officer and Director Bars and Penalties; Equitable Relief.
If an issuer is required to prepare a restatement due to “material noncompliance” with financial reporting requirements, the chief executive officer and the chief financial officer shall “reimburse the issuer for any bonus or other incentive-based or equity-based compensation received” during the twelve months following the issuance or filing of the non-compliant document and “any profits realized from the sale of securities of the issuer” during that period.
In any action brought by the SEC for violation of the securities laws, federal courts are authorized to “grant any equitable relief that may be appropriate or necessary for the benefit of investors.”
Section 305: Officer and Director Bars and Penalties.
The SEC may issue an order to prohibit, conditionally or unconditionally, permanently or temporarily, any person who has violated section 10(b) of the 1934 Act from acting as an officer or director of an issuer if the SEC has found that such person’s conduct “demonstrates unfitness” to serve as an officer or director of any such issuer.
Section 306: Insider Trades During Pension Fund Black-Out Periods Prohibited.
Prohibits the purchase or sale of stock by officers and directors and other insiders during blackout periods. Any profits resulting from sales in violation of this section “shall inure to and be recoverable by the issuer.” If the issuer fails to bring suit or prosecute diligently, a suit to recover such profit may be instituted by “the owner of any security of the issuer.”