On August 22, 2012, the Securities and Exchange Commission (SEC) adopted final rules implementing Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that requires “resource extraction issuers” to report certain payments to the U.S. and foreign governments for the commercial development of oil, natural gas or minerals. The final rules apply to U.S. and foreign companies (including smaller reporting companies) that meet the definition of a resource extraction issuer, which is any company that is required to file an annual report with the SEC and engages in the commercial development of oil, natural gas or minerals. The new rules must be complied with for fiscal years ending after September 30, 2013.
The SEC’s rules define “commercial development of oil, natural gas or minerals” to include the activities of exploration, extraction, processing and export, or the acquisition of a license for any such activity. This includes both the production of oil and natural gas as well as the extraction of minerals. The term “commercial development” is intended to capture only activities that are directly related to the commercial development of oil, natural gas or minerals, excluding any ancillary or preparatory activities.
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