Extractive industry payment disclosure rules finalized

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 March 16, 2021
• Compliance is required starting with the fiscal year ending no earlier than March 16, 2023
• 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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