The SEC has adopted final rules requiring mining, oil and
natural gas companies that are required to file an annual report
with the SEC to provide detailed disclosure of payments they make
What You Need to Know
Payments made to a foreign government of any level, or to a
company that is majority-owned by a foreign government, or to the
U.S. federal government must be disclosed (payments to U.S.
governments below the federal level may be excluded).
The new rules do not provide exemptions to foreign private
issuers and provide no exemptions based on size, ownership, or the
extent of operations constituting commercial development of oil,
natural gas, or minerals.
The rules are substantially similar to those under Canada's
Extractive Sector Transparency Measures Act (ESTMA), and
Canadian cross-border companies will be permitted to file their
ESTMA reports with the SEC in satisfaction of the U.S. rules.
Key Provisions of the SEC Rules
Reportable payments, whether a single payment or a series of
related payments, are those equal to or exceeding US$100,000 during
the most recent fiscal year that are made to further the commercial
development of oil, natural gas or minerals.
Reportable payment types include taxes, royalties, license and
other fees, production entitlements, bonuses, dividends, community
and social responsibility payments (if required by law or contract)
and payments for infrastructure improvements.
Information required to be disclosed includes the amount of
payments made on a per-project and per-government basis, the type
of payment, the applicable project's geographic location, the
fiscal year such payment was made, and the government that received
To protect confidential information about new resource
discoveries, disclosure of payments relating to exploratory
activities may be delayed for one year.
A Form SD must be filed annually within 150 days of fiscal year
end, beginning with fiscal year ending on or after September 30,
2018. Therefore, for companies with December 31 year ends, the
first reports on Form SD will be due by May 30, 2019.
Companies that have acquired or otherwise obtain control over a
company whose resource extraction payments are required to be
disclosed, and that has not previously been obligated to provide
such disclosure under these new rules or another
"substantially similar" jurisdiction's requirements
in its last full fiscal year, do not need to commence reporting
payment information for the acquired company until the Form SD
filing for the fiscal year immediately following the
If a company is subject to a substantially similar regulatory
regime, the company (or a government, industry group or trade
association) may apply to have the SEC recognize that regime. The
SEC has already recognized Canada's ESTMA and the EU Accounting
and Transparency Directives, so companies subject to those regimes
may file those reports with the SEC, under cover of Form SD, to
satisfy the U.S. rules. The U.S. Extractive Industries Transparency
Initiative has also been recognized, but only in respect of
payments to the U.S. government, so a company complying with that
regime must supplement their Form SD with additional
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