The Securities and Exchange Commission (the
"Commission") recently announced it
adopted final rules to require resource extraction issuers to
disclose payments made to governments for the commercial
development of oil, natural gas or minerals.
The rules require an issuer to disclose payments made to the US
federal government or a foreign government if the issuer engages in
the commercial development of oil, natural gas, or minerals and is
required to file annual reports with the Commission under the
Securities Exchange Act of 1934 (the
"Exchange Act"). The issuer must also
disclose payments made by a subsidiary or entity controlled by the
Under the rules, resource extraction issuers must disclose
payments that are: made to further the commercial development of
oil, natural gas, or minerals; not de minimis; and within
the types of payments specified in the rules. The rules define
"commercial development of oil, natural gas, or
minerals" as exploration, extraction, processing, and
export, or the acquisition of a license for any such activity and
"not de minimis" as any payment, whether a
single payment or a series of related payments, which equals or
exceeds $100,000 during the same fiscal year. Payments that must be
disclosed are taxes, royalties, fees (including license fees),
production entitlements, bonuses, dividends, payments for
infrastructure improvements, and, if required by law or contract,
community and social responsibility payments. The disclosure must
be made at the project level, similar to the approach adopted in
the European Union and Canada.
The rules include two targeted exemptions to the reporting
obligations. One exemption provides that a resource extraction
issuer that has acquired a company not previously subject to the
rules will not be required to report payment information for the
acquired company until the filing of a Form SD (a specialized
disclosure report for conflict minerals disclosure) for the first
fiscal year following the acquisition. Another exemption provides a
one year delay in reporting payments related to exploratory
activities. The Commission also could exercise its existing
Exchange Act authority to provide exemptive relief from the
requirements of the rules on a case by case basis.
The required disclosure will be filed publicly with the
Commission annually on Form SD no later than 150 days after the end
of its fiscal year. The information must be included in an exhibit
and electronically tagged using the extensible Business Reporting
Language (XBRL) format. Resource extraction issuers are required to
comply with the rules starting with their fiscal year ending no
earlier than September 30, 2018.
A resource extraction issuer may use a report prepared for other
disclosure regimes to comply with the rules if the Commission
determines that the requirements applicable to those reports are
substantially similar. In a separate order, the Commission
determined that the current reporting requirements of the European
Union Accounting and Transparency Directives (as implemented in a
European Union or European Economic Area member country),
Canada's Extractive Sector Transparency Measures Act,
and the U.S. Extractive Industries Transparency Initiative are
substantially similar to the Commission's rules, subject to
certain conditions specified in the order and in the final
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).