Unanimous SEC Decision Proposes Payments Disclosure Requirement for Issuers
Resource extraction issuers now face the possibility of being required to enhance transparency in their payments to U.S. and foreign governments after the Securities and Exchange Commission has proposed disclosure requirement in accordance with the Dodd-Frank Act.
The new payment disclosure requirement extends its clout to resource extraction issuers who are required to file a report with the SEC every year and have participation in the commercial development of oil, natural gas, or minerals. It also includes subsidiary’s payments or any other body under the issuer.
Included in the payments disclosure requirement is the consolidated financial requirement information pertaining to an issuer’s subsidiary as reflected in the Exchange Act report.
Issuers must disclose information about taxes, royalties, miscellaneous fees, production entitlements, and bonuses, payments connected with commercial development that the Extractive Industries Transparency Initiative requires to be disclosed, according to SEC.
Specifically, the disclosure requirement orders the issuers to submit information regarding the development of oil, natural gas, or minerals, such as the amount made for every project and to each government and the type of project, amount of payments by category, the payment’s currency, the period for which the payments were made, the issuer’s line of business, and the government that received the payments.
The annual report would be published in two exhibits. One is a text format that the investors can easily see without having to use computer programs or software, giving them quick access to the payment information of issuers. The other involves eXtensible Business Reporting Language that can only be read using computer software.
SEC opens the payments disclosure requirement for public comment until January 31, 2011.