New SEC Rules Require Payment Disclosures for Resource Extraction Issuers

The SEC voted on December 16, 2020, to adopt rules to implement Section 13(q) of the Securities Exchange Act.  

The rule requires resource extraction issuers to annually file a Form SD including information detailing payments related to the commercial development of oil, natural gas, or minerals made to a foreign government or the federal government.  

The rules define resource extraction issuers as oil, natural gas, and mining companies required to file reports under Section 13 or 15(d) of the Securities Exchange Act of 1934.

An overview of the rules and their potential impact follows.


Section 13(q) was originally added to the Securities Exchange Act in 2010 by Section 1504 of the Dodd Frank Act. The addition directed the commission to issue final rules that require each resource extraction issuer to include, in an annual report, information relating to any payment made to a foreign government or the federal government by:

  • The resource extraction issuer
  • A subsidiary of the resource extraction issuer
  • An entity under the control of the resource extraction issuer

The commission adopted rules to implement Section 13(q) in 2016, but the 2016 rules were disapproved pursuant to the Congressional Review Act by a joint resolution of Congress.

Final Rule Highlights

The final rules, among other items, now:

  • Require public disclosure of company-specific, project-level payment information
  • Define the term project to require disclosure at the national and major subnational political jurisdiction as opposed to the contract level—recognizing that more granular contract-level disclosure could be used to satisfy the rule
  • Define control to exclude entities or operations in which an issuer has a proportionate interest 

Relief and Exceptions

The final rule also contains relief and exemptions intended to help certain issuers, including:

  • Two new conditional exemptions for situations in which a foreign law or a pre-existing contract prohibits the required disclosure 
  • A conditional exemption for smaller reporting companies and emerging growth companies
  • A deadline extension for furnishing the payment disclosures

Additionally, the Form SD will be furnished to the SEC and not filed with the SEC, which could limit liabilities related to the information in the form.

Effective Dates and Submission Deadlines

The rules will become effective 60 days after publication in the Federal Register. After a two-year transition period, an issuer will be required to submit Form SD annually no later than 270 days following the end of its most recently completed fiscal year. 

For example, if the rules were to become effective on March 1, 2021, the compliance date for an issuer with a December 31 fiscal year-end would be Monday, September 30, 2024—270 days after its fiscal year end of December 31, 2023.

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If you have questions regarding filing Form SD or how it could impact your business, contact your Moss Adams professional.

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