Last week, the Canadian federal government brought new legislation into force, which establishes reporting requirements of payments made to governments by mining (and other extractive) companies. The Extractive Sector Transparency Measures Act applies to Canadian listed companies, as well as those companies above certain monetary / employee thresholds with assets or business located in Canada, which are involved in oil, gas or minerals. Reporting will commence in respect of financial years ending after 1 July 2016.
What are the requirements?
Like the UK and Norwegian legislation that came into force in 2014 (see here for our e-bulletin on the UK position), the key focus of the legislation is reporting of any payments to government entities that exceed $100,000, whether monetary or in kind (including taxes, royalties, fees, production entitlements, bonuses, dividends). Those payments may be at any level of government, including from June 2017 to Aboriginal entities.
And similar to the approach by the UK government and as reflected in the EU Directives approach, the Canadian legislation contains an equivalency clause which allows for substitution of another jurisdiction’s reporting regime, to address the concern of multiple overlapping reporting obligations. Since the Norwegian reporting requirements were the first to come into force, reporting has already commenced under those requirements (see here for Statoil’s report).
Other jurisdictions to follow?
There is expected to be further implementation of the EU Directives by European countries this year, given the deadlines later this year for transposing the EU Directives into national laws.
The relevant US SEC rules promulgated under the Dodd-Frank Act have been subject to controversy, and were overturned by the US District Court for the District of Columbia in 2013. It appears now that revised rules may not be produced until spring of 2016.