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August 23, 2012

SEC tightens disclosure requirements for energy companies

The US Securities and Exchange Commission (SEC) has adopted rules requiring oil, gas and mineral extraction firms to disclose information on payments made to both governments in the US and abroad in their annual financial reports.

The new rules apply to companies required to submit an annual report to the SEC and refers to payments made in order to acquire licences for exploration, extraction and other commercial development activities. Payments under $100,000 are not included under the new regulation but it requires energy firms to provide the SEC with the following information:

  • type and total amount of payments made for each project;
  • type and total amount of payments made to each government;
  • total amounts of the payments by category;
  • currency used to make the payments;
  • financial period in which the payments were made;
  • business segment of the resource extraction issuer that made the payments;
  • the government that received the payments, and the country in which the government is located, and
  • the project of the resource extraction issuer to which the payments relate.

From 30 September 2013 resource extraction firms will have to comply with rules no later than 150 after their year end.

The required information must be disclosed by filling a ‘Form SD’ in one exhibit that should be electronically tagged using the eXtensible Buiness Reporting Language (XBRL) format.

SEC’s new rules have been adopted on the back of the Dodd-Frank Act and seek to enhance the transparency and accountability of governments that receive payments from oil, gas and mineral extraction firms.

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