Canada: Canada Confirms Plans To Extend Mandatory Public Reporting Of Payments In The Extractive Sector To Aboriginal Entities

For the past several years, the federal government has been seeking public input on its plans to increase resource revenue transparency in the extractive sector in Canada and align its reporting standards with those of international markets. Natural Resources Canada (NRCan) began consultations with public stakeholders in April 2013 regarding the development of reporting standards for payments made by extractive companies to domestic and foreign governments. An industry working group, the Resource Revenue Transparency Working Group,1 was established in September 2012 to provide recommendations to NRCan, which were published in a report on January 16, 2014 (Working Group Recommendations).2

On March 3, 2014, NRCan released a paper seeking further consultations with industry stakeholders regarding its proposed requirements for extractive companies to publicly disclose payments made to governments. The six-page paper, entitled Establishing Mandatory Reporting Standards for the Extractive Sector (Consultation Paper), is the federal government's first public statement to provide in-depth details of the proposed reporting requirements. For the first time, the Consultation Paper confirms that payments to Aboriginal entities will be included for the purposes of mandatory reporting.

This article provides a brief summary of the main features of the mandatory reporting requirements as they are reported in the Consultation Paper, focusing on the implications for companies doing business with Aboriginal groups. If implemented, the reporting requirements could significantly affect the way in which companies approach the negotiation and implementation of impact benefit agreements and similar arrangements with Aboriginal groups. For a more detailed analysis of the non-Aboriginal aspects of the proposed reporting requirements, see our earlier article.  

What Are the Purposes of Mandatory Reporting?

According to the Consultation Paper, a key purpose of the mandatory reporting requirements is to build on a global trend of enhancing the transparency of payments made to governments, while reducing the incidence of bribery, corruption and mismanagement of funds. Canada's standards are also intended to align with those being implemented in the United States (through the Dodd-Frank Act) and the European Union (through its Transparency and Accounting Directives), and to eliminate duplicative reporting to multiple jurisdictions.

To Whom Will the Reporting Standards Apply?

If implemented, the reporting standards would apply to both foreign and domestic companies operating in Canada in the extractive industries: commercial development of oil, natural gas and minerals (exploration, extraction, primary processing) and international export.3

The reporting standards would apply to all publicly listed companies, as well as to private companies that meet or exceed two of the following three thresholds: C$20 million in assets, C$40 million in net turnover and 240 employees. In the case of subsidiaries or joint ownership of a project, companies with a controlling interest in a project in Canada would be subject to the reporting requirements.

What Must Be Reported?

If the standards are implemented, the following types of payments of over $100,000 made to all levels of government (including to Aboriginal entities), both domestically and abroad, must be reported:4

  • taxes on income, production or profits of companies, excluding consumption taxes;
  • royalties;
  • fees (licence, rental and entry fees, and other considerations for licences and/or concessions);
  • production entitlements;
  • bonuses (such as signature, discovery and production bonuses);
  • dividends paid in lieu of production entitlements or royalties (excluding dividends to governments as ordinary shareholders); and
  • payments for infrastructure improvements (such as roads and electricity).

The Consultation Paper states that "social payments" may be excluded from the reporting requirements. These would include payments such as those supporting community centres, schools, hockey teams, arenas, capacity development and training. These types of payments are fairly common features of impact benefit agreements, so this means that not all types of payments made to Aboriginal groups would necessarily be captured.

Based on the above list, it also appears that payments made to Aboriginal groups for the purposes of funding participation in consultation or regulatory proceedings, or to carry out traditional land use or environmental studies, would not be captured.

What Aboriginal Entities Would Be Included?

The Consultation Paper proposes that the following types of Aboriginal entities be considered "governments" for reporting purposes:

  • Aboriginal organizations or groups with law-making power and/or governance mechanisms related to the extractive sector;
  • provincially or federally incorporated Aboriginal organizations that undertake activities in the extractive sector on behalf of their beneficiaries; and
  • Aboriginal organizations or groups that are empowered to negotiate legally binding agreements (e.g., impact benefit agreements) on behalf of their members.

The Consultation Paper notes that an unresolved issue is how payments to foreign indigenous entities would be captured.

How Would Reporting Be Carried Out?

NRCan proposes that companies would use a common reporting template designed for equivalency with the United States and European Union standards. Companies would post annual reports made in accordance with recognized accounting standards on a project-by-project basis on their corporate website for public access. Companies would also be required to inform the government and post a public notice confirming they have complied with their reporting obligations.

The Consultation Paper also proposes that each company's public disclosure be linked on the Treasury Board Secretariat's Open Government portal. This feature would significantly streamline the public's ability to access a large amount of data regarding multiple companies' operations and finances.

NRCan has also indicated a preference for the reporting regime to be carried out with the cooperation of provincial securities regulators under provincial securities laws. However, the federal government has indicated its plans to move forward with implementation on its own if needed.

Implications for Negotiating Agreements with Aboriginal Groups

The Consultation Paper expressly states that "payments to Aboriginal entities by extractive companies would also be captured by the reporting standards, including relevant payments in Impact Benefit Agreements." In this respect, the reporting standards proposed by Canada are a significant departure from the U.S. and EU standards and, as a result, government  risks losing the support of the extractive industry (at least the mining industry, which has largely been supportive to date). Certainly, the inclusion of payments to Aboriginal entities is a substantial policy decision and will be the subject of significant controversy and debate.

The Working Group Recommendations, which did not extend to payments made to Aboriginal entities, note several important benefits for extractive companies operating in Canada. For example, increased transparency can lead to greater government accountability, deter corruption and bribery, inform public debate on resource development, assist investors to analyze risks and help companies achieve social licence. It can also lead to stabler business environments and relationships between business, governments and communities. By extension, an improved business and community environment can generally improve operating and development outcomes for extractive companies. It could be argued that many of these same policy considerations apply to payments made to Aboriginal groups, particularly given the indirect influence these deals often have on government decision-making on projects in the extractive sector.

Nevertheless, if implemented, the mandatory reporting requirements have the potential to significantly affect the current dynamic between resource companies and Aboriginal groups, and may force companies to rethink their approach to negotiating agreements with Aboriginal groups. Currently, the vast majority of impact benefit agreements between extractive companies and Aboriginal groups in Canada, and the payments made under such agreements, are confidential. There are often strong incentives for both companies and Aboriginal groups to maintain confidentiality in their agreements.

There are also practical issues with the currently proposed approach. Since the reporting standards apply only to payments over $100,000 and not all types of payments are captured by the reporting standards, this approach could potentially be misleading. Such reporting will not always provide a complete picture of the payments and benefits provided under a particular impact benefit agreement. For example, important benefits related to employment, contracting and business opportunities contained in most impact benefit agreements would not be captured, potentially resulting in the financial component of these deals becoming the focal point of negotiations. Instead of creating certainty and transparency between business and Aboriginal groups, such partial reporting could in fact have the opposite effect.

What Happens Next?

The Consultation Paper states that further consultations with stakeholders will occur between March and May 2014. It indicates that consultation materials will be posted on the Treasury Board Secretariat's Open Government portal for stakeholder comment during this time. The federal government has also released a backgrounder that provides NRCan's contact information for where the public can direct their questions about the proposed reporting requirements.

NRCan intends for the mandatory reporting standards to be in place by June 2015. This is a relatively short time frame in which the federal government intends to introduce legislation and implement the reporting standards. Unless provincial regulators are brought onside relatively quickly, at this stage it seems likely that the reporting will, at least at the outset, be a federally imposed initiative.


1 The Working Group comprised the Mining Association of Canada, the Prospectors & Developers Association of Canada, Publish What You Pay — Canada and the Revenue Watch Institute.

2 McCarthy Tétrault legal update on the Working Group Recommendations

3 Companies in the business of transporting resources within Canada would not be subject to the reporting standards (e.g., domestic pipelines).

4 Companies could also choose to voluntarily report smaller payments.

To view original article, please click here.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Osler, Hoskin & Harcourt LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Osler, Hoskin & Harcourt LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions