New Disclosure Requirements Imposed in Connection with Iran Sanctions


[authors: Robert L. Kohl, Michelle Griswold]

On August 10, President Obama signed into law the Iran Threat Reduction and Syria Human Rights Act of 2012 (the Act), which expands and establishes additional sanctions with respect to Iran, including sanctions relating to energy, development of weapons of mass destruction, certain activities of financial institutions, and human rights abuses. In addition to an increase in sanctions, the Act includes new mandatory disclosure requirements under the Securities Exchange Act of 1934 (the Exchange Act).

The Act amends the Exchange Act to require issuers that are required to file annual or quarterly reports under Section 13 to make additional disclosures with respect to certain activities relating to Iran. Issuers must disclose whether, during the period covered by the report, they or any of their affiliates knowingly:

  • engaged in activities described in Sections 5(a) or 5(b) of the Iran Sanctions Act of 1996 (including certain investments or the provision of goods or services that contribute to Iran’s ability to develop petroleum resources or acquire or develop weapons of mass destruction); 
  • engaged in activities described in Sections 104(c)(2), 104(d)(1) or 105A(b)(2) of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (including certain activities by foreign financial institutions that facilitate the efforts of the government of Iran or certain other persons relating to terrorism and weapons of mass destruction and transactions by persons owned or controlled by a domestic financial institution that benefit certain Iranian governmental entities); 
  • conducted any transaction or dealing with certain persons who are blocked pursuant to certain executive orders; or 
  • conducted any transaction or dealing with certain persons related to the government of Iran without authorization from a federal department or agency.

An issuer disclosing any of the above information must include a detailed description of each activity, including the nature and extent of the activity, the gross revenues and net profits attributable to the activity and whether the issuer or its affiliate intends to continue the activity.

Issuers reporting such information will also be required to separately file with the Securities and Exchange Commission a notice that the disclosure was made. The SEC will then transmit the report containing the disclosure to the President and Congress and will make the information available on the internet. Upon receiving such a report from the SEC, the President must initiate an investigation regarding possible sanctions that may be imposed.

This amendment to Section 13 of the Exchange Act is effective for quarterly and annual reports required to be filed with the SEC after February 6, 2013.

To view the full text of the Act, click here.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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