SEC Issues Compliance Guide to Disclosure Requirements of Resource Extraction Payments | Practical Law

SEC Issues Compliance Guide to Disclosure Requirements of Resource Extraction Payments | Practical Law

The SEC released a compliance guide outlining the disclosure requirements of payments by resource extraction issuers to foreign governments or the US federal government and in another action denied a motion to stay the effectiveness of these requirements.

SEC Issues Compliance Guide to Disclosure Requirements of Resource Extraction Payments

by PLC Corporate & Securities
Published on 13 Nov 2012 • USA (National/Federal)
The SEC released a compliance guide outlining the disclosure requirements of payments by resource extraction issuers to foreign governments or the US federal government and in another action denied a motion to stay the effectiveness of these requirements.
On November 9, 2012, the SEC published a Small Entity Compliance Guide (Guide) outlining resource extraction payment disclosure reporting requirements. The Guide summarizes and explains final rules adopted by the SEC on August 22, 2012 requiring resource extraction issuers to disclose payments made to foreign governments or the US federal government for the commercial development of oil, natural gas or minerals, as required under Section 1504 of the Dodd-Frank Act. Separately, on November 8, 2012, the SEC issued an order denying a motion to stay the effectiveness of these rules.

New Compliance Guide

Under the new rules, a resource extraction issuer must disclose certain information about payments made to governments and the projects to which they relate, on a project-by-project and aggregate basis, in new Form SD if it both:
  • Must file an annual report with the SEC.
  • Engages in the commercial development of oil, natural gas or minerals. This includes activities such as exploration, extraction, processing and exporting, but does not include activities that are ancillary or preparatory to commercial development.
The payment information must also be included in XBRL format as an exhibit to the Form SD.
A resource extraction issuer must comply with the disclosure requirements for fiscal years after September 30, 2013. For the first report, however, the issuer may provide a partial report that discloses only those payments made after September 30, 2013. Resource extraction issuers must file their Form SD within 150 days after the end of their fiscal years. For a calendar year-end issuer, the first report is due by May 30, 2014.
For more information on the resource extraction disclosure rules, see Legal Update, SEC Adopts Final Rules on Payment Disclosure by Resource Extraction Issuers).

Denial of Motion for Stay

In October 2012, the US Chamber of Commerce and several petroleum trade groups and associations petitioned the DC Circuit Court for review of the final resource extraction payment disclosure rules and filed a complaint with the court challenging the validity of the rules. These groups also filed a motion with the SEC to stay the effective date of the final rules. On November 8, 2012, the SEC denied the motion to stay the rules, primarily because the court is expediting the litigation schedule. The SEC expects a decision by the court as early as spring 2013, which is well before the first Form SD would be required.