On October 16, 2020, the SEC adopted amendments to the auditor independence requirements in Rule 2-01 of SEC Regulation S-X. In the press release announcing the amendments, the SEC noted that the rule changes were “[i]nformed by decades of staff experience applying the auditor independence framework,” and will “more effectively focus…on relationships and services that may pose threats to an auditor’s objectivity and impartiality.”
The amendments will, among other things:
- Amend the definition of “affiliate of the audit client” to address certain affiliate relationships, including entities under common control (such as portfolio companies of private equity investors);
- Shorten the look-back period for domestic first-time filers;
- add certain student loans and de minimis consumer loans to exclusions from independence-impairing lending relationships; and
- Replace the reference to “substantial stockholders” in the business relationship rule with the concept of “beneficial owners with significant influence.”
The new rules will be effective 180 days after publication in the Federal Register, with early compliance permitted, subject to some exceptions.
Please direct any questions or observations to Gunster securities law and corporate governance practice leader Bob Lamm.
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This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken that might be influenced by this publication.
About Gunster
Gunster, Florida’s law firm for business, provides full-service legal counsel to leading organizations and individuals from its 13 offices statewide. Established in 1925, the firm has expanded, diversified and evolved, but always with a singular focus: Florida and its clients’ stake in it. A magnet for business-savvy attorneys who embrace collaboration for the greatest advantage of clients, Gunster’s growth has not been at the expense of personalized service but because of it. The firm serves clients from its offices in Boca Raton, Fort Lauderdale, Jacksonville, Miami, Naples, Orlando, Palm Beach, Stuart, Tallahassee, Tampa Bayshore, Tampa Downtown, Vero Beach, and its headquarters in West Palm Beach. With more than 280 attorneys and consultants, and over 290 committed professional staff, Gunster is ranked among the National Law Journal’s list of the 500 largest law firms and has been recognized as one of the Top 100 Diverse Law Firms by Law360. More information about its practice areas, offices and insider’s view newsletters is available at www.gunster.com.
