The Extractive Sector Transparency Measures Act, S.C.
2014, c. 39, s. 376 ("ESTMA"), which received royal
assent on December 16, 2014, applies to all commercial developers
of "oil, gas or minerals." Developers who meet certain
criteria must report to the Minister regarding payments they make
to various parties (payees). The ESTMA defines "payee"
broadly to include any domestic or foreign government, trust,
board, commission, corporation or other body or authority,
including bodies established by two or more governments, or
government delegates. For financial years starting after June 1,
2017, Aboriginal governments will also be considered payees.
This Bulletin summarizes some of the key provisions, and
regulatory burden that will be borne by the Canadian resource
extraction sector, in respect to the ESTMA.
The ESTMA's stated purpose is "to implement
Canada's international commitments to participate in the fight
against corruption through the imposition of measures applicable to
the extractive sector."
WHO IS AFFECTED?
The ESTMA affects commercial developers of "oil, gas or
minerals." Under the ESTMA, oil specifically refers to
"crude petroleum, bitumen and oil shale."
However, "gas" and "minerals"
are broad terms. Gas means anything produced "in association
with natural gas," not including oil, while minerals refers to
"all naturally occurring metallic and
An entity is engaged in the commercial development of oil, gas
or minerals if it is engaged in:
i. the exploration or extraction of oil, gas or minerals;
ii. the acquisition or holding of a permit, licence, lease or
any other authorization to carry out any of the activities referred
to in (i) above; or
iii. any other prescribed activities in relation to oil, gas or
Connnection to Canada
If a commercial developer is listed on a Canadian stock
exchange, they must comply with the ESTMA. Developers who
are not listed on a Canadian stock exchange might still be required
to comply if they have assets, a place of business or do business
These developers must comply with the ESTMA if they meet two of
the following three criteria, for at least one of their two most
recent financial years:
i. owns $20 million or more in assets;
ii. generated at least $40 million in revenue; or
iii. employs an average of at least 250 employees.
The ESTMA regulations have not yet been issued. Once they are
issued, the regulations may prescribe other commercial developers
who must comply.
WHAT ARE A DEVELOPERS OBLIGATIONS
Developers caught by the ESTMA are required to provide a report
to the Minister. Such report must include all payments (as defined
below) made to governments. Payments only need to be included in a
report if the payments are in excess of $100,000 in any
one payment category, to any one government. A developer might pay
more than $100,000 to a single government and not need to include
these payments in the report. This would occur if the payments are
less than $100,000 in each category. It is an offence under the
ESTMA to structure "any payments... with the intention of
avoiding the requirement to report those payments."
WHAT IS A "PAYMENT"?
Under the ESTMA, payments do not have to be monetary. They can
also be in kind. Payment categories include the following:
taxes (other than consumption taxes and personal income
fees, including rental fees, entry fees and regulatory charges
as well as fees or other consideration for licences, permits or
bonuses, including signature, discovery and production
dividends other than dividends paid as ordinary
infrastructure improvement payments; or
any other prescribed category of payment.
WHAT ELSE IS REQUIRED?
In addition to providing the report, a director or officer of
the developer needs to attest that the report is "true,
accurate and complete." Developers also need to provide
ESTMA reports to the Minister and to the public. Developers need to
keep records of their reports for seven years, unless later
specified in the regulations.
WHEN TO REPORT?
The ESTMA is now in force. Developers will have to comply for
their financial years which start after June 1, 2015. Reports are
due 150 days after their financial year end.
FAILURE TO FILE
Failure to file a report under the ESTMA can result, upon
summary conviction, in a $250,000 fine.
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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