Following numerous postponements, the final rule on Resource Extraction by the SEC is now in effect. Companies involved in the extraction of resources, including those in the oil, natural gas, and minerals industries, are required to disclose payments like taxes or fees associated with their commercial resource development activities. Starting from September 2024, for most filers, this payment information must be submitted using the standard/traditional XBRL tagging format on Form SD.
What You Should Know About the Resource Extraction Final Rule?
The information needs to be submitted using Form SD. The SEC’s Form SD, also known as Specialized Disclosure, can be perplexing for those filing it due to its dual and separate reporting obligations, each with its own submission deadlines. Here are the reporting obligations:
- Report on Conflict Minerals: (Under Rule 13p-1)
- Report on Resource Extraction: (Under Rule 13q-1)
Submission Timeline for Form SD
Annually, by May 31, issuers are required to submit Conflict Minerals reports on Form SD, detailing their usage of gold, tin, tantalum, and tungsten in HTML format.
Who Needs to Report?
- The final rule is applicable to both relevant domestic and foreign private issuers.
- Issuers or their subsidiaries involved in the commercial development of oil, natural gas, or minerals must disclose payments made to federal or local governments.
- Emerging Growth Companies (EGC) and Smaller Reporting Companies (SRC) are exempt from this rule and do not need to report, unless they fall under similar requirements in an alternative reporting regime in a different jurisdiction.
- New issuers are exempt from compliance until the fiscal year after their Initial Public Offering (IPO) is finished.
Disclosures Required
Here is a list of things that need to be reported in XBRL format:
- Filers must report payments that exceed the threshold of $100,000.
- The type and total amount of payments, categorized by payment type, are made for each project related to the commercial development of oil, natural gas, or minerals.
- The type and total amount of payments, categorized by payment type, are made for all projects to each government.
- The total amounts of the payments are categorized by payment type.
- The currency used for the payments.
- The fiscal year in which the payments were made.
- The business segment of the resource extraction issuer that made the payments.
- The governments (including any foreign government or the Federal Government) that received the payments and the country where each government is located.
- The specific project of the resource extraction issuer to which the payments are related.
- The resource being commercially developed.
- The extraction method used in the project.
- The major subnational political jurisdiction of the project.
XBRL Tagging: Filing Requirements
Here is what the filing consists of:
- A Form SD cover (HTML format)
- Exhibit 2.01 (containing the report in standard XBRL tagged data)
- Any other exhibits (HTML format)
Important Deadlines You Must Know
- The SEC has allowed a two-year transition period following the rule’s effective date.
- Resource extraction filings are required to be submitted 270 days after the end of the issuer’s fiscal year, once the two-year transition period has concluded.
- For issuers with a fiscal year end of 12/31/2023, their initial Form SD is due by September 26, 2024.
- Filers who are reporting under an alternative jurisdiction can adhere to the submission deadline of their home jurisdiction, such as Canada.
Other Key Information on Resource Extraction Final Rule
- Under the final Resource Extraction rule, the SEC has included a provision that permits filers from other jurisdictions with comparable extraction reporting requirements to submit their disclosures in compliance with the SEC Form SD filing. This is referred to as “alternate reporting.”
- The SEC acknowledges the disclosure frameworks from Canada, the European Union, Norway, and the United Kingdom as being in compliance with this approach.
- To be compliant, the data must be tagged in XBRL format.
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