SEC Adopts Rules for Resource Extraction Issuers Under Dodd-Frank Act

Thoughtware Alert Published: Jul 21, 2016
Oil Pump in a field

The U.S. Securities and Exchange Commission (SEC) recently announced it adopted rules that require resource extraction issuers to disclose payments made to governments for the commercial development of oil, natural gas or minerals. The rules, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, are intended to advance U.S. foreign policy interests by promoting greater payment transparency related to resource extraction. These rules replace those previously adopted by the SEC on August 22, 2012, and subsequently vacated by the U.S. District Court for the District of Columbia.

The final rules require an issuer to disclose payments made to the U.S. 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 SEC under the Securities Exchange Act of 1934. The issuer also must disclose payments made by a subsidiary or entity it controls. The final rules specify resource extraction issuers must disclose payments that are:

  • Made to further the commercial development of oil, natural gas or minerals—as defined in the rules
  • Not de minimis, defined in the rules as any payment—whether single or a series of related payments—that equals or exceeds $100,000 during the same fiscal year
  • Within the types of payments specified in the rules

The required public disclosure must be annually filed with the SEC on Form SD, Specialized Disclosure Report, no later than 150 days after the entity’s fiscal year-end. Resource extraction issuers are required to comply with the rules starting with their fiscal year ending no earlier than September 30, 2018.

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