SEC Adopts Final Rules for Reporting Resource Extraction Payments

The Securities and Exchange Commission has adopted a new rule that will require oil, natural gas, and mineral extraction companies to disclose payments made to foreign governments.

For your reference, here’s a roundup of legal updates on the topic:

SEC Adopts Final Resource Extraction Rules (Katten Muchin Rosenman LLP):

“The new rules will require SEC registrants that are engaged in the development of oil, natural gas or minerals (resource extraction issuers) to report payments made to foreign governments, including sub-national governments, or to the US federal government of taxes, royalties, fees (including license fees), production entitlements, bonuses, dividends and infrastructure improvements on a new Form SD.” Read on>>

SEC Issues Final Rules Concerning Disclosure Of Government Payments By Resource Extraction Issuers (Patton Boggs LLP):

“The SEC’s rules define ‘commercial development of oil, natural gas or minerals’ to include the activities of exploration, extraction, processing and export, or the acquisition of a license for any such activity. This includes both the production of oil and natural gas as well as the extraction of minerals. The term ‘commercial development’ is intended to capture only activities that are directly related to the commercial development of oil, natural gas or minerals, excluding any ancillary or preparatory activities.” Read on>>

SEC Adopts New Rules Requiring Disclosure of Payments by Resource Extraction Issuers to Governments (K&L Gates LLP):

“The Final Rules provide that any ‘payment’ that is ‘not de minimis’ made by a Resource Extraction Issuer to a foreign government or the U.S. Federal Government must be reported… The Final Rules define ‘not de minimis’ as any payment (or series of related payments) equal to or exceeding US$100,000. The aggregate effect of the provisions of the Final Rules described above is that in order to satisfy its obligations under the Exchange Act, a Resource Extraction Issuer must report any payment made to a foreign government or the U.S. Federal Government equal to or exceeding US$100,000 in any fiscal year.” Read on>>

SEC Adopts Rules Requiring Disclosure of Payments by “Resource Extraction Issuers” (Skadden, Arps, Slate, Meagher & Flom LLP):

“The final rules define a ‘foreign government’ to include a foreign national government and a foreign subnational government, such as the government of a state, province, county, district, municipality or territory. A foreign government includes a department, agency or instrumentality of a foreign government, as well as a company that is at least majority-owned by a foreign government.” Read on>>

New Disclosure Requirements for Resource Extraction Issuers (Leonard, Street and Deinard):

“The types of payments related to commercial development activities that need to be disclosed include taxes, royalties, fees (including license fees), production entitlements, bonuses, dividends, and infrastructure improvements. The new requirements clarify the types of taxes, fees, bonuses, and dividends that are required to be disclosed.” Read on>>

SEC Shines Light on Resource Extractor Payments (McDermott Will & Emery):

“The SEC’s final rules are similar in substance to the proposed rules the Commission issued on December 23, 2010, with minor changes intended to clarify affected issuers’ disclosure obligations. Consistent with the Commission’s proposed rules, the final rules do not exempt small entities from disclosure requirements. All companies meeting the definition of a resource extraction issuer, including companies considered ‘small businesses’ or ‘small organizations,’ are subject to Section 13(q)’s disclosure requirements.” Read on>>

SEC Adopts Final Rule on Disclosure of Payments by Resource Extraction Issuers (Duane Morris LLP):

“Issuers must comply with the new rule for fiscal years ending after September 30, 2013. Issuers with fiscal years that began before September 30, 2013, will file a partial-year report for the period October 1, 2013, through the end of their fiscal year. For fiscal years beginning on or after September 30, 2013, issuers will file a report for their full fiscal year. Reports will be due within 150 days after fiscal-year end.” Read on>>

The SEC Acts – New Rules for Extractive Industries and Conflict Minerals (Michael Volkov):

“Senator Lugar, one of the chief sponsors of this provision explained that the requirement ‘would help empower citizens to hold their governments to account for the decisions made by their governments in the management of valuable oil, gas, and mineral resources and revenues. . . The essential issue at stake is a citizen’s right to hold its government to account. Americans would not tolerate the Congress denying them access to revenues our Treasury collects. We cannot force foreign governments to treat their citizens as we would hope, but this amendment would make it much more difficult to hide the truth.’” Read on>>

SEC Expands Disclosure Requirements for Energy Exploration Companies – Oil, Gas and Minerals (Sutherland Asbill & Brennan LLP):

“Companies subject to the new requirement to publicly disclose project-specific expenses will likely want to implement new internal procedures, or enhance existing procedures, to ensure that sufficient information regarding such payments is both gathered and retained going forward.” Read on>>

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