April 2, 2003

The SEC staff has issued

The SEC staff has issued no-action relief – and the precise form of CEO/CFO certifications – for two classes of asset-backed issuers: auto lease securitizations and resecuritizations. The no-action letters are and

Yesterday, at Chairman Donaldson’s 1st open Commission meeting, the SEC adopted rules regarding audit committee requirements and delisting standards. For the most part, the adopted rules are the same as the proposed rules. The following provides a snapshot certain aspects of the new rules regarding “independence” [thanks to Mike Holliday] – more details are in the SEC’s press release available below:

– Advisory and consulting fees – The new rules do not contain a de minimus amount exception.

– Safe harbor – The adopted safe harbor keeps the proposed ownership test at 10% (so that a person who is not an executive officer or 10% owner will not be an “affiliated person”). The final rules will indicate that failure to meet the safe harbor terms will not create an presumption that the person is affiliated, which will be subject to a facts and circumstances test.

– Outside director of company and subsidiary – The final rules contain the exemption that a director otherwise independent to both companies would be permitted to be on the audit committee of a listed company as well as an affiliate. There was no discussion as to whether any change was made to the proposal that the exemption applies to a consolidated, majority-owned subsidiary.

– IPO exemption – The proposed exemption was expanded to require at least one independent member on the audit committee at the time of listing, a majority of independent members within 90 days, and all independent members within a full year.

Companies must be in compliance with the new rules by their 1st annual meeting after January 15, 2004 (or by October 31, 2004 at the latest). Foreign issuers and small business issuers would have until July 31, 2005. As adopted, the transition period is about 6-7 months longer than the proposed period. This will be helpful for March 31, June 30 and September 30 fiscal year-end companies. However, because it does not add a complete annual cycle to the proposal, it will not really provide any additional lead time for calendar year fiscal year companies.

The SEC’s press release is at