On May 30, 2013, the United States Securities and Exchange Commission (the “SEC”) issued nine Frequently Asked Questions (“FAQs”), relating to its recently-adopted rules requiring disclosure on a new “Form SD” of certain government payments made by “resource extraction issuers,” defined as issuers involved in the commercial development of oil, natural gas or minerals. These rules were summarized in our Client Bulletin dated January 29, 2013, in which we noted that, based on our conversations with SEC staff, it was unclear whether and to what extent these rules would apply to shipowners engaged in the transportation of oil, natural gas or minerals. The SEC in these newly-issued FAQs has addressed this question, along with several other notable points summarized below.

Application to Shipowners

The SEC has clarified that, while it depends on the circumstances, it will generally not consider an issuer to be a resource extraction issuer if it is engaged in transporting a resource but does not itself have an ownership interest in the resource being transported. Such an issuer would therefore not have to provide Form SD disclosure.

Application to Service Providers

The FAQs state that “[a] company providing only services associated with exploration, extraction, processing and export generally would not be considered to be a resource extraction issuer.” As an example, the SEC does not believe that a company engaged by an operator to provide drilling services for the operator, thus enabling the operator to extract resources, would itself be considered a resource extraction issuer. The SEC notes that “only companies directly engaged in the extraction or production of oil, natural gas or minerals must disclose payments to governments.” However, a service provider may need to file Form SD disclosures if the service provider makes payments on behalf of a resource extraction issuer.

Application to Subsidiaries and Controlled Companies

The FAQs clarify that an issuer must disclose on Form SD payments made by the issuer as well as by its subsidiaries and other controlled companies. A reporting issuer which does not itself engage in activities subject to disclosure on Form SD, but which has a subsidiary or controls a company which does, will be considered a resource extraction issuer subject to the Form SD disclosure requirements.

Impact on Form F-3 and S-3 Eligibility

The FAQs state that the failure by an issuer to timely file Form SD will not impact an issuer’s eligibility to file or use a Form F-3 or S-3 shelf registration statement.

If you have questions about the SEC’s rules applicable to resource extraction issuers, please contact your Seward & Kissel attorney.