On January 16, 2014, the Resource Revenue Transparency Working
Group (comprising the Mining Association of Canada, the Prospectors
and Developers Association of Canada and two non-governmental
organizations) released its recommendations for the development of
a payment transparency standard for all publicly traded mining
companies in Canada. This comes seven months after Canada (NRCan)
announced that it was committed to establishing new mandatory
reporting standards for Canadian extractive companies to improve
transparency of payments made to governments worldwide.
The recommendations provide that publicly traded mining
companies in Canada would be required to disclose project-level
payments to domestic (including national and sub-national
authorities) and foreign governments. The recommendations do not
address payments made to Aboriginal governments (although inclusion
of such payments is anticipated to be part of the NRCan
initiative). Large mining companies would be required to disclose
all payments above $100,000 and venture issuers would be required
to disclose payments above $10,000. The types of payments captured
by the recommendations include profit taxes, royalties, fees,
production entitlements, bonuses, dividends, infrastructure
payments required by law and transportation and terminal operation
The Working Group's recommendations stipulate that the most
appropriate venue for a Canadian disclosure framework would be
through securities regulation, making reporting mandatory and
extending disclosure requirements to foreign companies seeking to
raise capital in Canadian markets. Payment disclosure would be
reported on an annual basis and would be publicly accessible. The
Working Group strongly recommends alignment with other
jurisdictions such as the United States and the European Union and
suggests that a Canadian reporting regime would need to include
explicit recognition and acceptance of such equivalent reporting
regimes. Alignment with the United States may prove difficult at
this juncture given that the U.S. Dodd-Frank disclosure rule under
section 1504 regarding mandatory reporting was overturned in July
2013 and is currently being redrafted by the Securities Exchange
Commission.NRCan has not taken a position with respect to the
Working Group's recommendations but is taking them into
consideration. From past announcements, it is expected that
NRCan's reporting requirements would cover public and private
Canadian companies as well as foreign companies operating in
Canada. NRCan has completed its initial consultations and expects
that a preferred reporting option will be selected and subjected to
public consultation this spring.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
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