The U.S. Securities and Exchange Commission (SEC) has adopted final rules requiring oil, gas and mineral exploration companies to make annual disclosures regarding certain payments made to the U.S. government and foreign governments. See final rules. Companies subject to the new requirement to publicly disclose project-specific expenses will likely want to implement new internal procedures, or enhance existing procedures, to ensure that sufficient information regarding such payments is both gathered and retained going forward. Indeed, while the new requirements could potentially increase compliance costs for these companies, termed “resource extraction issuers,” because they direct the companies to formally record and disclose a wide range of government payments, proper planning and implementation of internal procedures in response to the new disclosure requirements could potentially help mitigate those additional costs.
The rules – pertaining to Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd Frank Act) – will require companies to file the disclosure with the SEC for fiscal years ending after September 30, 2013.
Who Must Disclose -
The new rules apply to a broad range of domestic and foreign energy companies termed “resource extraction issuers,” which are defined as:
- Any company that files an annual report with the SEC and engages in “commercial development of oil, natural gas or minerals” (i.e., engages in exploration, extraction, processing, export or “other significant actions” relating to oil, natural gas or minerals or the acquisition of a license for any such activity).
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