Exploring Corporate Governance Around the World

By Allison Garrett, Senior Vice President for Academic Affairs at Oklahoma Christian University

Friday, September 16, 2005

Extraterritorial Application of Sarbanes-Oxley and EU Privacy Laws

Companies voluntarily established ethics hotlines to lessen sentences under the federal sentencing guidelines. Multinationals voluntarily set up hotlines to assist them in FCPA compliance. Sarbanes-Oxley's section 301 requires that companies establish procedures for whistleblowers to report anonymously to companies' audit committees. Most companies provide multiple ways to do so, but the most common is a hotline.

Now, companies with European operations face a difficult decision: comply with Sarbanes-Oxley, or with the EU's data protection laws? Two U.S. companies have been informed by France's Data Protection Authority (CNIL) that proposed ethics hotlines are illegal there. Links to a client alert memo from Hunton & Williams and the CNIL web site follow:



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