Shaira Nanji, articling student, assisted in the preparation of this article.
On August 22, 2012, the United States Securities and Exchange Commission passed a new rule regarding section 1504 of the Dodd-Frank Wall Street Financial Reform Act (the “Act”) which focuses on transparency of natural resource payments. Canadian mining companies that are listed or traded on U.S. exchanges should be aware of the new regulation. The purpose of the regulation is to enhance corporate and government accountability.
Section 1504 of the Act states that publicly traded issuers must annually disclose and report any payment or series of payments over $100,000 to governments related to the commercial development of oil, natural gas or minerals. Issuers must file a new form called Form SD, Specialized Disclosure, starting after September 30, 2013. The new regulation clarifies the types of taxes, fees, bonuses, and dividends that are required to be disclosed. The types of payments related to commercial development activities that need to be disclosed include:
• fees (including license fees);
• production entitlements;
• dividends; and
• infrastructure improvements.