SEC Issues Final Rule on Disclosing Payments by Issuers Engaged in Resource Extraction

Published on: 23 Aug 2012

Yesterday, the SEC issued a final rule1 implementing Section 1504 of the Dodd-Frank Act,2 under which issuers that are (1) required to file an annual report with the SEC and (2) engaged in commercial resource extraction of oil, natural gas, and minerals must disclose certain payments made to the federal government or foreign national or subnational governments. Domestic issuers (including smaller reporting companies), foreign issuers, their subsidiaries, and other entities controlled3 by such extractive issuers are subject to the final rule’s disclosure requirements.

Payments to be disclosed are those that (1) advance the commercial development4 of oil, natural gas, and minerals in a specific region and (2) equal or exceed $100,000 — individually and in the aggregate (i.e., those that are not de minimis). Types of payments include taxes, royalties, fees, production entitlements, bonuses, dividends, and infrastructure improvements.5 Disclosures must include:

  • The total amount of payments made, by category, for each project and to each government.
  • The currency in which payments were made.
  • When the payments were made (i.e., the corresponding financial period).
  • The business segment of the resource extraction issuer that made the payments.
  • The country (government) that received the payments.
  • The project(s)6 for which payments were made.

The final rule requires extractive issuers to annually file with the SEC a newly created Form SD rather than disclose payments to governments as an exhibit to the annual report filed with the SEC. In addition, the disclosures must be an exhibit to Form SD that is electronically tagged (i.e., in the XBRL interactive data format). Extractive issuers are required to file Form SD with the SEC no later than 150 days after their fiscal year-end and to comply with the final rule’s disclosure provisions for fiscal years ending after September 30, 2013.7

Watch for Deloitte’s upcoming Heads Up newsletter about the final rule.


[1] SEC Final Rule Release No. 34-67717, Disclosure of Payments by Resource Extraction Issuers.

[2] Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act amends the Securities Exchange Act of 1934 by adding Section 13(q).

[3] The final rule does not define “control” but indicates that an extractive issuer would evaluate whether it controls an entity by considering “all relevant facts and circumstances.”

[4] Commercial development includes the exploration, extraction, processing, and export or the acquisition of a license to perform such activity.

[5] The types of payments are consistent with those detailed in the Extractive Industries Transparency Initiative (EITI) or other statutory requirements. As noted in footnote 14 of the final rule, “[t]he EITI is a voluntary coalition of oil, natural gas, and mining companies, foreign governments, investor groups, and other international organizations dedicated to fostering and improving transparency and accountability in countries rich in oil, natural gas, and minerals through the publication and verification of company payments and government revenues from oil, natural gas, and mining.”

[6] Although the final rule does not define “project,” it provides guidance on what might constitute a project.

[7] For the first report, an extractive issuer whose fiscal year began before September 30, 2013, will need to disclose only those payments made after September 30, 2013, to the end of the issuer’s fiscal year.

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