TheCorporateCounsel.net

Some SEC filings are required to be signed by a company’s “principal accounting officer” – but does that mean that every company must have a person designated as a PAO?  Perkins Coie’s Benjamin Dale addressed that question in a recent blog:

The PAO is a designation that is often held by a company’s controller or chief financial officer (CFO). Sometimes the PAO designation is held by someone who is not the controller or CFO. But is a PAO technically required?

Rule 16a-1 of the Exchange Act is instructive and defines an officer as the “principal accounting officer (or, if there is no such accounting officer, the controller)” (emphasis added). Under Rule 16a-1, if a company does not have a PAO, then the controller is deemed to fill that role and is considered a Section 16 officer. It’s possible for the controller to be a Section 16 officer and not otherwise be treated as an “executive officer” under Rule 3b-7 of the Exchange Act if the controller doesn’t have a policy-making function.

Ben points out that Nasdaq and NYSE rules also don’t explicitly require companies to have a PAO and treat the controller as the PAO and an executive officer for purposes of the clawback listing standards. He also notes that companies should check their bylaws in order to determine whether those require it to appoint a person to serve in that capacity.

– John Jenkins