SEC Decides on Rules for Resource Extraction Issuers Under Dodd-Frank Act
Abstract:
The Securities & Exchange Commission (SEC) decided today to suggest rules, as desired by the Dodd-Frank Act, to require resource extraction issuers to disclose payments made to the U.S or foreign gov-ernments.
Requirements of the Suggested Rules
The suggested rules require a resource extraction issuer to disclose certain payments made to a foreign government, including sub-national governments, or the US federal government. Additionally, the resource extraction issuer should disclose payments made by a subsidiary or another entity controlled by it. The resource extraction issuer will be subject to disclosure if it is otherwise required to provide consolidated financial information for the subsidiary or other entity in its financial statements included in its Exchange Act reports.
The resource extraction issuer has to disclose payments that are made to promote the commercial development of oil, natural gas, or minerals and that are not de minimis. Exploration, extraction, processing and export, or the acquisition of a license for any such activity also fall under the purview of the definition of commercial development of oil, natural gas, or minerals.
The types of payments related to commercial development activities that must be disclosed include:
- Taxes
- Royalties
- Fees (including license fees)
- Production Entitlements
- Bonuses
The Extractive Industries Transparency Initiative (referenced in the statutory definition of payment) suggests the payments to be disclosed. The types of payments furnished above are generally consistent with what EITI has suggested.
The resource extraction issuer should furnish the information annually in its Exchange Act annual report through two exhibits – one exhibit in investor-friendly text format and the other in eXtensile Business Reporting Language (XBRL).
SEC will consider public comments on the suggested rules until Jan 31, 2011 before deciding whether to adopt the suggested rules.
Source:
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