Lsst week Congress passed the “Iran Threat Reduction and Syrian Human Rights Act” (H.R.1905) which will become effective Oct. 9. A lot media attention has focused on the passage of this bill as the upcoming presidential election nears. However, the bill primarily amends current U.S. sanctions on Iran, such as the Iran Sanctions Act, the Comprehensive Iran Sanctions, Divestment and Accountability Act (“CISADA”), and the Iran Transactions Regulations. The most significant provision of the bill would levy sanctions on U.S. parent companies of foreign subsidiaries and affiliates that engage in transactions involving Iran. Maximum civil penalties that can be assessed for violations of the legislation would be twice the value of the underlying transaction unless the U.S. parent divests itself of the foreign entity within 180 days after the bill has been enacted (i.e., by Feb. 6, 2013).
In addition, by Feb. 6, 2013 all companies covered by Section 13 of the Securities and Exchange Act of 1934 will be required to disclose in their quarterly and annual reports whether they or their foreign entities have:
(A) knowingly engaged in an activity or a transaction prohibited by the Iran Sanctions Act or CISADA;
(B) knowingly engaged in any human rights abuses committed against the Iranian people as identified under section 105A(b)(2); or,
(C) knowingly conducted any transactions or dealings with Specially Designated Nationals who are involved in terrorist activities, weapons of mass destruction, or the Government of Iran.
U.S. parent companies will also be required to submit a detailed description of each such activity (i.e., the nature and extent of the activity, gross revenues and net profits earned from the activity, and whether the U.S. parent or foreign entity intends to continue the activity). This information will also be required to be the subject of a separate filing with the SEC, which will in turn report the information to the president and Congress.
Other provisions in the bill amending existing law and regulations are intended to strengthen the current sanctions imposed on the Iranian energy sector; the transportation of oil from Iran (including shipping company evasions); the development of weapons of mass destruction in Iran; the provision of vessels and/or shipping services to transport certain goods related to terrorism or nuclear proliferation activities; underwriting, insuring or reinsuring the National Iranian Oil Company or the National Iranian Tanker Company; purchasing, subscribing to or facilitating Iranian sovereign debt; or dealings with certain Specially Designated Nationals.
Source: STR Trade Report