Exchange Act Requires Issuers to Disclose Iran-Related Activities: Disclosures Required in Reports Due to Be Filed On or After February 6, 2013

Sullivan & Cromwell LLP - Revised December 5, 2012

On August 10, 2012, President Obama signed into law Public Law 112-158, the Iran Threat Reduction and Syria Human Rights Act of 2012 (the “ITRA”). The ITRA added to and strengthened existing U.S. sanctions regarding Iran, including the Iran Sanctions Act of 1996 (the “ISA”) and the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (“CISADA”), and added new sanctions targeting human rights abuses in Iran and Syria.

Section 219 of the ITRA added a new Section 13(r) to the Securities Exchange Act of 1934 (the “Exchange Act”). Section 13(r) requires each issuer that must file an annual or quarterly report under Exchange Act Section 13(a) to disclose in that report whether, during the period covered by the report, the issuer or its affiliates have knowingly engaged in certain, principally Iran-related, activities. Most of these activities may lead to the imposition of sanctions under the ISA, CISADA or other authorities, and, by requiring the SEC to deliver a report containing a responsive disclosure to the President, who must then investigate and make a sanctions determination, the provision appears to be designed to prompt the imposition of sanctions against persons engaged in targeted activities.

The provision applies to all issuers that must file reports under Exchange Act Section 13(a). However, because the targeted activities are generally illegal under U.S. law, but not necessarily so under non-U.S. laws, the disclosure requirements are most likely to impact non-U.S. reporting companies and U.S. reporting companies with non-U.S. affiliates. The provision is effective for all reports required to be filed on or after February 6, 2013, and, thus, will apply to most annual reports for 2012. SEC rulemaking is not required to implement the provision.