Hot Topic | January 2021

 

Insight

Extractive industry payment disclosure rules finalized

Updated: The SEC finalizes rules requiring disclosure of payments to governments by extractive industry companies.

The final rules seek to satisfy a requirement of the Dodd-Frank Act by providing transparency through disclosures of payments to governments by resource extraction issuers, and address concerns from previously overturned rules.

Applicability

Final rule: SEC Release No. 34-90679

  • SEC extractive industry issuers (i.e. commercial development of oil, natural gas or minerals) required to file an annual report

Relevant dates

  • Effective 60 days after publication in the Federal Register
  • Compliance is required starting with the fiscal year ending no earlier than two years from the effective date
  • Disclosures must be furnished to the SEC no later than 270 days following the end of the most recently completed fiscal year.

Key impacts

The finalized rules:

  • Require public disclosure of payments to governments by companies engaged in the commercial development of oil, natural gas or minerals at the project level.
  • Define ‘project level’ and outline required disclosures of payments to any foreign government or the US federal government.
  • Define ‘control’ to exclude entities or operations in which an issuer has a proportionate interest.
  • Include certain exemptions and relief, including: 
    • two conditional exemptions for situations in which a foreign law or a pre-existing contract prohibits the required disclosure;
    • exemptions for smaller reporting companies and emerging growth companies; and
    • relief for issuers that have recently completed their initial public offering or an acquisition.
  • Require disclosure by deeming the payment information to be furnished to, but not filed with, the SEC using Form SD; and
  • Specify the compliance date to start with the fiscal year ending no earlier than two years after the effective date of the final rules.

Report contents

  • Background and impacts
  • Key provisions of the rules
  • Effective date and transition

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