Companies and Aboriginal communities negotiating resource
agreements should note the Resource Revenue Transparency Working
Group's January 16, 2014 release of itsRecommendations on Mandatory Disclosure of
Payments from Canadian Mining Companies to
Governments.The Recommendations stem from
Canada's June 2013 commitment to enhance transparency in the
extractive sector. The Working Group is comprised of
representatives from the Mining Association of Canada, the
Prospectors & Developers Association of Canada (PDAC), Publish
What You Pay Canada and the Revenue Watch Institute. The Working
Group's transparency initiative is widely supported by Canadian
Companies and Aboriginal communities want to know how the
reporting would work and whether payments under resource
agreements/IBAs will come under the purview of any Canadian
requirements. The recommendations do not currently include oil and
gas or Aboriginal payments. However, such payments could follow in
a second phase of the project, dubbed "transparency 2.0"
by Working Group member and PDAC Executive Director, Ross
Gallinger, at an Ontario Bar Association address on February 19,
2014. To take effect, the recommendations must next be adopted,
following discussions with provincial securities commissions and
the provincial finance ministries. Presumably, Aboriginal
communities would be consulted about making IBA payments subject to
The Proposed Reporting Regime
The Working Group recommends that the requirement apply to
mining companies making payments over $100,000 for TSX issuers and
$10,000 for venture exchange participants. All profit taxes,
royalties, production entitlements, bonuses, dividends,
infrastructure, transportation and terminal fees would be
reportable, without exemption. The Working Group recommends that
mandatory reporting for public companies be established through
provincial securities requirements. Access to this information
would provide citizens around the world with tools to promote
accountable, responsible and transparent management of natural
recourses. Companies that fail to report would be penalized
consistent with enforcement regimes of provincial securities
U.S. Reporting Requirements
Over 100 of the largest Canadian companies listed on U.S. stock
exchanges are required to report payments to the U.S. and foreign
governments under section 1504 of the US Dodd-Frank Wall Street
Reform and Consumer Protection Act (the Dodd-Frank
Act). However, the American Petroleum Institute and others
successfully challenged recent rules under this section (SEC Rule
13q-1) which required disclosing the same information to the
public. The U.S. District Court for the District of Columbia
concluded that Rule 1504 was never meant to require affected
companies to disclose information that contract or regulations
required be kept confidential, and vacated SEC Rule 13q-1. The U.S.
will likely introduce new rules which allow for confidential
submission of information under the Dodd-Frank Act.
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