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SEC Issues Staff View, Reconsideration of Conflict Minerals Rule to Implementation

Disclosure of Payments by Resource Extraction Issuers

Modernization of Property Disclosures for Mining Registrants

Resource Extraction Issuers -- SEC Adopts Rules for Resource Extraction Issuers Under Dodd-Frank Act

Articles

SEC Issues Staff View, Reconsideration of Conflict Minerals Rule to Implementation

Summary - SEC Acting Chair Michael S. Piwowar directed the SEC staff to reconsider whether the 2014 guidance on the conflict minerals rule is still appropriate and whether any additional relief is appropriate. This was announced by Mr. Piwowar in a public statement.

According to the statement, in April 2014, the Court of Appeals for the D.C. Circuit held that a portion of the disclosure required by the SEC’s Conflict Minerals Rule violated the First Amendment. Shortly thereafter, the then-Director of the Division of Corporation Finance issued guidance regarding compliance with the rule in light of the court’s decision and the Commission issued an order staying the effect of the compliance date for those portions of the rule found to be unconstitutional. The case was subsequently remanded to the district court for further consideration. The litigation remains ongoing and the SEC staff’s guidance remains in effect.

In the interim, the temporary transition period provided for in the rule has expired. The reporting period beginning January 1, 2017, is the first reporting period for which no issuer falls within the terms of that transition period. In light of this, as well as the unexpected duration of the litigation, Acting SEC Chair Piwowar directed the SEC staff to consider whether the 2014 guidance is still appropriate and whether any additional relief is appropriate in the interim.

Mr. Piwowar encourages interested parties to submit detailed comments and request that they be submitted within the next 45 days.

For more information, click here.

Disclosure of Payments by Resource Extraction Issuers

The final rules require an issuer to disclose payments made to the U.S. federal government or a foreign government if the issuer engages in the commercial development of oil, natural gas, or minerals and is required to file annual reports with the SEC under the Securities Exchange Act. The issuer must also disclose payments made by a subsidiary or entity controlled by the issuer. Specifically, under the final rules, resource extraction issuers must disclose payments that are:

Made to further the commercial development of oil, natural gas, or minerals (as defined in the rules);
Not de minimis, which is defined in the rules as any payment, whether a single payment or a series of related payments, which equals or exceeds $100,000 during the same fiscal year; and
Within the types of payments specified in the rules.

The required disclosure will be filed publicly with the SEC annually on Form SD no later than 150 days after the end of its fiscal year. The information must be included in an exhibit and electronically tagged using the eXtensible Business Reporting Language format. Resource extraction issuers are required to comply with the rules starting with their fiscal year ending no earlier than September 30, 2018.

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Modernization of Property Disclosures for Mining Registrants

Summary - The SEC announced that it has proposed rules to modernize the disclosure requirements for mining properties by aligning them with current industry and global regulatory practices and standards. The proposed revisions would update disclosure requirements for mining registrants in Item 102 of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and related guidance in Industry Guide 7.

"These proposed rules would modernize the Commission's disclosure requirements by aligning them with global standards and give investors more comprehensive information of a registrant's mining properties that they can use to make informed investment decisions," said SEC Chair Mary Jo White. "This proposal is another product of our disclosure effectiveness initiative, which is aimed at modernizing our disclosure regime and providing more meaningful information to investors."

The Commission's proposed rules would:

Provide one standard requiring registrants to disclose mining operations that are material to the company's business or financial condition;
Require a registrant to disclose mineral resources and material exploration results in addition to its mineral reserves;
Permit disclosure of mineral reserves to be based on a preliminary feasibility study or a final feasibility study;
Provide updated definitions of mineral reserves and mineral resources;
Require, in tabular format, summary disclosure for a registrant's mining operations as a whole as well as more detailed disclosure for material individual properties;
Require that every disclosure of mineral resources, mineral reserves and material exploration results reported in a registrant's filed registration statements and reports be based on, and accurately reflect information and supporting documentation prepared by, a "qualified person"; and
Require a registrant to obtain a technical report summary from the qualified person, which identifies and summarizes for each material property the information reviewed and conclusions reached by the qualified person about the registrant's exploration results, mineral resources or mineral reserves

In addition, the proposed rules would rescind Industry Guide 7 and include the SEC's mining property disclosure requirements in a new subpart of Regulation S-K.

Public comment on the proposed rule should be received by the Commission no later than 60 days after publication in the Federal Register.

For more information, click here.

Resource Extraction Issuers -- SEC Adopts Rules for Resource Extraction Issuers Under Dodd-Frank Act

Summary - The SEC announced it adopted rules to require resource extraction issuers to disclose payments made to governments for the commercial development of oil, natural gas or minerals. The rules, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, are intended to further the statutory objective to advance U.S. foreign policy interests by promoting greater transparency about payments related to resource extraction. These rules were adopted to replace previous rules that were initially adopted by the SEC on August 22, 2012, but were subsequently vacated by the U.S. District Court for the District of Columbia.

The final rules require an issuer to disclose payments made to the U.S. federal government or a foreign government if the issuer engages in the commercial development of oil, natural gas, or minerals and is required to file annual reports with the SEC under the Securities Exchange Act. The issuer must also disclose payments made by a subsidiary or entity controlled by the issuer. Specifically, under the final rules, resource extraction issuers must disclose payments that are:

Made to further the commercial development of oil, natural gas, or minerals (as defined in the rules);
Not de minimis, which is defined in the rules as any payment, whether a single payment or a series of related payments, which equals or exceeds $100,000 during the same fiscal year; and
Within the types of payments specified in the rules.

For more information, click here.