SEC Staff Issues C&DIs on Disclosure Requirements under Iran Sanctions Bill | Practical Law

SEC Staff Issues C&DIs on Disclosure Requirements under Iran Sanctions Bill | Practical Law

The SEC's Division of Corporation Finance issued seven new compliance and disclosure interpretations relating to the Iran Threat Reduction and Syria Human Rights Act of 2012.

SEC Staff Issues C&DIs on Disclosure Requirements under Iran Sanctions Bill

Practical Law Legal Update 4-522-9321 (Approx. 3 pages)

SEC Staff Issues C&DIs on Disclosure Requirements under Iran Sanctions Bill

by PLC Corporate & Securities
Published on 06 Dec 2012 • USA (National/Federal)
The SEC's Division of Corporation Finance issued seven new compliance and disclosure interpretations relating to the Iran Threat Reduction and Syria Human Rights Act of 2012.
On December 4, 2012, the SEC's Division of Corporation Finance issued seven new compliance and disclosure interpretations (C&DIs) relating to the Iran Threat Reduction and Syria Human Rights Act of 2012 (the Act). The Act expands the types of transactions and other activities with Iran and Syria that are subject to sanctions and holds US entities liable for any of these transactions and activities undertaken by their foreign subsidiaries. In particular, the Act adds Section 13(r) to the Exchange Act, requiring periodic reporting disclosure of sanctionable Iran-related transactions or activities. For more on the Act, see Legal Update, President Signs Expanded Iran Sanctions Bill that Includes Additional Disclosure Requirements.
Among other things, the C&DIs clarify that:
  • Iran-related disclosures under Section 13(r) are required in annual and quarterly reports that are due after February 6, 2013 even if the report is filed early, before February 6.
  • Required disclosures in periodic reports include activities during the entire period covered by the report. For example, a Form 10-K for the year ending December 31, 2012 should include required disclosure of any activities that took place between January 1, 2012 and December 31, 2012 even though the Act did not come into effect until August 10, 2012.
  • Disclosure under Section 13(r) is only required if the issuer or its affiliates engaged in specified activities during the period covered by a periodic report. An issuer does not need to state in periodic reports that it did not engage in these activities.
  • The term "affiliate" under Section 13(r) is as defined in Exchange Act Rule 12b-2.
  • Section 13(r)(1)(D)(iii) of the Exchange Act requires disclosure of transactions with the Government of Iran (including any entities it owns or controls) without specific authorization from a federal department or agency. To omit disclosure, the authorization must come from a US federal department or agency; a non-US entity's authorization will not suffice.
  • Both a general license (authorizing a particular type of transaction for a class of persons) and a specific license (authorizing a particular transaction for a particular person or entity) from the Office of Foreign Assets Control (OFAC) will constitute specific authorization from a US federal agency.