SEC Issues FAQ’s on Disclosure of Activities Relating to Iran

In August 2012, the Iran Threat Reduction and Syria Human Rights Act of 2012 became law.  Among other things, Section 219 of the Act added Section 13(r) to the Securities Exchange Act of 1934.  Section 13(r) requires companies that file periodic reports under Section 13(a) of the Exchange Act to disclose in their quarterly and annual reports certain information related to activities that they or any of their affiliates knowingly engaged in involving Iran.  Generally, the activities for which disclosure is required are defined by various laws and executive orders that already exist and govern activities relating to Iran.  Importantly, Section 219 does not require the SEC to promulgate any rules.  Thus, reporting companies will have to comply with the disclosure requirements with respect to periodic reports required to be filed after February 6, 2013.    

To provide reporting companies assistance in interpreting and complying with new Section 13(r), on December 4, 2012, the SEC released seven new FAQs discussing the additional disclosure requirements.  Among other things, the FAQs affirm that activities covered by Section 13(r) that occurred during the fiscal year covered by an annual report must be reported in such annual report even if the activities occurred prior to August 10, 2012, the date the Act became law.  In addition, the SEC confirmed that reporting companies should look to the definition of “affiliate” in Exchange Act 12b-2 when interpreting Section 13(r).

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