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Proposed SEC Rule Aims to Curb Corruption in Oil, Gas, Mineral Industries

By:
Chris Gaetano
Published Date:
Dec 15, 2015
'Oil derrick east of Freer, TX IMG 0969' by Billy Hathorn at en.wikipedia. Licensed under CC BY-SA 3.0 via Wikimedia Commons The Securities and Exchange Commission has proposed a rule that, if implemented, would require companies involved in oil, natural gas or mineral extraction to disclose any payments they make to both foreign governments and the U.S. federal government connected to resource extraction. Drawn up as part of the Dodd-Frank Act, the rule is aimed at promoting transparency in these industries in order to "help combat global corruption and empower citizens of resource-rich countries to hold their governments accountable for the wealth generated by those resources." 

Specifically, if an issuer engages in commercial development of oil, natural gas or minerals, then they would need to disclose both the payment and information about the payment that includes: 
  • Type and total amount of such payments made for each project of the resource extraction issuer relating to the commercial development of oil, natural gas, or minerals.
  • Type and total amount of such payments for all projects 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.
  • The project of the resource extraction issuer to which the payments relate.
  • The particular resource that is the subject of commercial development.
  • The subnational geographic location of the project.

The information would be disclosed on the Form SD, and would need to be included in an exhibit and electronically tagged using XBRL. The SEC is taking comments until Jan. 26.