The Canadian federal government has brought in a new Act to
require greater reporting obligations around payments made to
governments by Canadian oil, gas and mining companies. The Act
emphasises the importance of monitoring and controlling payments to
governmental entities and individuals.
The government believes the Act will "eliminate
duplicative reporting to multiple jurisdictions, reducing the
administrative and cost burden on governments and companies."
The Act follows similar measures in the US under the Dodd-Frank
Act and in the EU under the Transparency and
Accounting Directives, both of which are expected to take
effect in 2015.
Operates in Canada and meets or exceeds two of the following
$20 million in assets;
$40 million in revenue; or
Employs 250 employees.
What Is Required?
The Act requires companies to publicly publish an annual report
of payments of $100,000 or more to all levels of governments, both
domestic and foreign. The threshold applies in aggregate to each
A payment is broadly defined and includes taxes, royalties,
fees, production entitlements, bonuses, and certain dividends.
Payments can be monetary or in kind.
What Is The Timing?
The Act received royal assent on December 16, 2014. No date has
been set for when the Act comes into force, but it is expected to be June 2015.
What Are The Penalties?
The Act creates corporate and personal liability, including for
any officer, director or agent.
Non-compliance with various provisions of the Act is an offence
punishable on summary conviction. Fines may also be imposed up to
$250,000 per offence. If an offence is committed or continued for
more than one day, each day constitutes a separate offence.
Enforcement of the Act is not spelled out in detail. Enforcement
officers designated by the Minister will have powers to enter any
place with reasonable grounds, access company documents and
computer systems, and remove anything from the place for the
purpose of examination.
What Are The Key Take-Aways?
Businesses operating in the extractive sector need to be aware
of the potential implications of this Act on their operations.
Businesses may need to re-evaluate their financial interactions
with governments in light of the requirement to make publicly
available details of significant payments.
The Act does include a due diligence defence; there will be no
conviction if the person can show that they exercised due diligence
to prevent the commission of the offence. This provides important
encouragement to companies to establish risk management control
systems, in particular where payments to governments are
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Law Society of British Columbia’s Cloud Computing Working Group issued its Final Report on Cloud Computing on January 27, 2012, amending an earlier consultation report approved by the "Benchers" on July 15, 2011.
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