- Canada Shines Spotlight on Extractive Sector
- June 15, 2015 | Authors: Sienne Lam; Mark Wheeler
- Law Firm: Borden Ladner Gervais LLP - Toronto Office
The Extractive Sector Transparency Measures Act (ESTMA) came into force on June 1, 2015, fulfilling the commitment Canada made at the 2013 G8 Leaders’ summit to apply international standards of transparency to the extractive sector. Broadly aligned with similar mandatory reporting standards in the U.K. and the European Union, ESTMA enhances the accountability of payments made by the mining, oil and gas industries to governments worldwide.
ESTMA applies to entities that are directly or indirectly engaged in the commercial development of oil, gas or minerals in Canada or elsewhere. Entities are required to report under ESTMA (Reporting Entities) if they either: (i) are listed on a stock exchange in Canada; or (ii) are subject to Canadian law by virtue of being based, doing business or holding assets in Canada and meet two of the following criteria in one of their two most recent financial years: (A) at least $20 million in assets; (B) at least $40 million in revenue; or (C) employ an average of 250 employees.
Reporting Entities must report annually on payments made to any level of government in Canada or abroad relating to the commercial development of oil, gas or minerals. Only payments to government payees aggregating in excess of $100,000 in specified categories (taxes, royalties, fees, production entitlements, bonuses, certain types of dividends, infrastructure improvement payments) must be reported. Reports must be made accessible to the public on corporate websites.
Reporting Entities are required to submit reports for each of their financial years beginning after June 1, 2015. For example, a Reporting Entity whose financial year begins on January 1 must report on payments starting from January 1, 2016. Reports must be filed within 150 days of the end of a reporting entity’s financial year. There is a two-year deferral of a Reporting Entity’s obligation to report payments made to Aboriginal governments in Canada.
Natural Resources Canada is developing guidelines to assist Reporting Entities in reporting under ESTMA, which are expected to be published shortly. In the process of developing such guidelines, Natural Resources Canada has consulted with approximately 70 extractive companies and their associations, 80 Aboriginal organizations and 30 civil society organizations.