For public companies, August 23, 2004, is the day that the real-time disclosure mandated by the Sarbanes Oxley Act (“SOX”) really arrives.

The SEC not only shortened the time frame for filing disclosures of material events on Form 8-K, it expanded the list of events that need to be disclosed. For most items, the company has four business days after the occurrence of the event to get the Form 8-K on file, a much shorter time frame than formerly. At the same time, items that used to be reported quarterly, or not reportable at all, are on the list of matters to be disclosed in real time.

These relate to:

Public companies have reviewed and revised their disclosure controls and procedures in response to SOX. Now these controls and procedures will have to operate within the Form 8-K Time frames.

Certain disclosure decisions can be delightfully and simply black and white: a contract to buy a company of equal size is going to be a material contract without question. Other disclosure decisions – such as just exactly what it is that the company says about its acquisition, or whether a smaller transaction does or does not qualify as being a “material” contract that requires disclosure – will be subtle, nuanced, and require a significant mastery of salient facts, all within a short period of time.

By using advanced preparation, the company can have its disclosure committee primed to deal with real-time disclosure decisions. In order to ensure that company disclosure controls and procedures are both flexible and adequate to permit the company to respond completely and accurately within the time frames, company disclosure committees, directors and executives should:

Familiarize themselves with the events that might trigger the Form 8-K filing requirement. Ensure that the membership of the disclosure committee includes at least one person who will be part of the company’s critical path for information flow relating to any potential Form 8-K filing event. For example, a material financial obligation should be known to the CFO; changes in the board of directors should be known by key directors. Each of them should be in a position to report to the disclosure committee, and to act on, a potential Form 8-K reportable event.

Ensure that disclosure committee members have backgrounds that permit them to act swiftly on disclosure decisions, and have sufficient logistical support to consult with one another and with counsel at the moment that the need arises.

With regard to financial matters, the company should regularly review what dollar threshold will trigger a materiality review of a financial question. Regular review of disclosure processes are mandated by SOX.

If a company does not already have a policy in place concerning the signature authority of subordinate officers to enter into material contracts, it should ensure that no material contracts are signed without the knowledge of officers in the company who can ensure appropriate securities disclosure compliance.

Bruce Dravis is a partner at Downey Brand LLP, operating primarily in the firm’s Sacramento and Roseville offices, specializing in corporate, securities and business law.