Canada: New Payment Disclosure Requirements Are Coming For Companies Engaged In The Commercial Development Of Oil, Gas And Minerals In Canada

On October 23, 2014, the Federal Government of Canada (the “ Government” ) introduced Bill C 43 (the “ Bill” ), which included the Extractive Sector Transparency Measures Act (the “ Act” ). The Act will require disclosure by entities in the extractive sector of payments made to government entities through a number of new annual reporting requirements. The Act has only passed First Reading but the Government intends to bring the Act into effect by April 1, 2015.

Companies in the extractive resource sector should familiarize themselves with the Act and  promptly raise any concerns regarding the Act in advance of its review by a Standing Senate Committee (the “ Committee” ), which has been authorized to examine the Act in advance of the Bill going before the Senate. In addition, such entities should begin evaluating the policies and procedures that will be required in order to comply with the legislation as well as any legal, regulatory or contractual commitments that may create difficulties complying with these new Canadian reporting requirements.


The Act aims to harmonize legislation with reporting standards in other G8 countries and enhance disclosure in the extractive industry. The Act’ s purpose overtly refers to Canada’ s commitment to participate in the global fight against corruption.


The Act applies to any entity that:

1.      is listed on a stock exchange in Canada

2.      has a place of business, does business, or has assets in Canada and, for at least one of the most recent two fiscal years, meets two of the following thresholds:

a.      has at least $20 million in assets

b.      has generated at least $40 million in revenue

c.      employs an average of at least 250 employees or

3.        is prescribed by legislation.

An “ entity” is defined as a corporation, trust, partnership or other unincorporated organization that:

a.      is engaged in the commercial development of oil, gas or minerals in Canada or elsewhere or

b.      controls (directly or indirectly, in any manner) a corporation, trust, partnership or unincorporated organization that is engaged in such activities in Canada or elsewhere.

Commercial development includes exploration or extraction, as well as a right to or the acquisition of a permit, licence, lease or any other authorization to explore or extract oil, gas or minerals. While the Act does not cover the Government’ s intention to include refining and transporting, as had been announced in the April 2014 Consultation Paper, section 23 of the Act does permit the Governor in Council to define “ exploration” and “ extraction” which may result in these activities being covered by the proposed legislation.

Reporting Requirements

Entities subject to the Act are required to annually report monetary or in kind payments made to any domestic or foreign government in relation to the commercial development of oil, gas or minerals under certain circumstances, a summary of which is described below. In addition, entities must also disclose payments made to a body established by two or more governments or to any trust, board, commission, corporation, body or authority that is established to exercise a government function. Payments made to government employees or holders of public office are deemed to be payments made to government entities. However, payments made to Aboriginal governments in Canada are not subject to the Act until two years after the legislation comes into force.

The Government of Canada has outlined specific categories of payments that must be publicly disclosed if payments in that category are made to the same payee in excess of (i) the amount prescribed by regulation or (ii) if no amount is prescribed, $100,000. The payment categories include:

a.      taxes, other than consumption taxes and personal income taxes

b.      royalties

c.      fees, including rental fees, entry fees and regulatory charges as well as fees or other consideration for licences, permits or concessions

d.      production entitlements

e.      bonuses, including signature, discovery and production bonuses

f.        dividends other than dividends paid as ordinary shareholders

g.      infrastructure improvement payments or

h.      any other prescribed category of payment.

Reports of such payments will be required to be filed with the applicable Minister within 150 days of the entity’ s financial year end. A director or officer of the entity or an independent auditor or accountant must attest that the information included in the report is true, accurate and complete. While the form of the report is not prescribed, it is anticipated that the Minister will require payments on a project by project basis as indicated in the Government’ s April 2014 Consultation Paper. It is also expected that entities will be required to issue an associated press release regarding its compliance with the reporting requirements as the Act requires the information to be made publicly available in the manner specified by the Minister.

The Government continues to work with the United States (“ US” ) and the European Union (“ EU” ) to develop a common reporting template to reduce the administrative compliance burden. In the event that a common reporting template is not achieved, the proposed legislation allows for an entity to provide reports utilized in other jurisdictions to the applicable Minister, provided the requirements are equivalent to Canadian reporting standards.

Compliance with the Act

The Minister can order an entity to provide any information and documentation in order to verify compliance, and provides expansive investigate powers to the Minister. The Minister is also permitted to order an entity to take any corrective measures that he or she considers necessary to comply with the reporting requirements under the Act. In the event of non compliance, the Act prescribes a fine of up to $250,000 for every person or entity that:
a.  fails to comply with the reporting requirements of the Act
b.  knowingly makes a false or misleading statement or knowingly provides false or misleading information or
c.  structures any payments, either monetary or in kind, with the intention of avoiding the reporting requirements of the Act.
An entity that structures payments to avoid the reporting requirements of the Act is also guilty of an offence punishable on summary conviction. A single event could constitute multiple offences, particularly given the fact that for each day an offence is committed or continued, such offence will be considered a separate offence. As a result, entities may face significant liability as fines may increase by up to $250,000 on a daily basis.
Section 25 of the Act explicitly establishes liability for directors, officers or agents of extraction sector entities. Individuals who direct, authorize, assent to, acquiesce in or participate in the commission of an offence are liable under the Act, regardless of whether the entity has been prosecuted or convicted of the offence.

Exemptions from the Act

The Government had previously acknowledged that situations may arise whereby disclosure of the required information is prohibited by contractual obligations or another jurisdiction’ s privacy or confidentiality laws. Nonetheless, the proposed legislation does not provide for any exemptions and aligns Canadian legislation with that of the EU. However, the lack of an exemption may put companies into a precarious situation whereby they are forced to breach either Canadian reporting requirements or foreign legal, regulatory or contractual requirements.
The US rules for extractive reporting issuers similarly did not provide for exemptions however, this turned out to be a “ serious error” as the District Court for the District of Columbia vacated these rules and referred to the Securities and Exchange Commission’ s (the “ SEC” ) decision to deny such exemptions as “ arbitrary and capricious.” The SEC will be responding with new rules in March 2015 and it will be interesting to see whether these will result in similar revisions to the proposed reporting requirements under the Act.

When Does the Act Take Effect?

As mentioned, the Government intends for this new legislation to be in force by April 1, 2015. The Act requires companies to issue reports beginning in the financial year following its enactment. Assuming the legislation comes into force April 1, 2015, the new reporting obligations will begin to impact companies with fiscal years ending in April. Changes to the legislation may occur prior to its enactment, as the Act has only passed First Reading and has yet to undergo review by the Committee.  

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.

In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.