Natural Resources Canada has finalized its implementation tools
for the Extractive Sector Transparency Measures Act
(ESTMA), which was proclaimed into force in June 2015. Commonly
known as the "publish what you pay" standards, ESTMA
establishes mandatory reporting standards for payments made by
Canadian extractive companies to governments worldwide.
The finalized implementation tools include a Guidance document, Technical Reporting Specifications, a Reporting Template and a Contact Form. The Guidance provides general
information and examples with respect to the scope of commercial
development of oil, gas and minerals, which entities are subject to
ESTMA and therefore must report, what type of payments must be
reported and where substitution with another jurisdiction's
reporting requirements may be acceptable. For example, the Guidance
confirms the following:
Unless an activity is integrated into extractive operations, it
is not subject to ESTMA (making most refining, smelting, marketing,
distribution, transportation or export activities outside
A company that is not subject to Canadian law and that has a
subsidiary operating in an extractive industry in Canada is not
subject to ESTMA even if the subsidiary is a reporting entity under
However, if a company subject to Canadian law controls an
entity (including "control" as established under IFRS or
GAAP) involved in the commercial development of an extractive
resource in a jurisdiction other than Canada, the controlling
Canadian company is a reporting entity under ESTMA.
The Guidance also provides clarification on whether payments
made to state-owned enterprises are reportable payments under
ESTMA. If the state-owned enterprise is acting as a commercial
business, the payment would not likely be a reportable payment. If
the state-owned enterprise is exercising a power, duty or function
of government, such payment would likely be reportable.
Reporting entities must enrol with Natural Resources Canada
prior to submitting a report under ESTMA. Natural Resources Canada
is encouraging enrolment before June 30, 2016, and has provided a
Contact Form for disclosure of basic
information as well as contact information for the reporting
entity's primary and alternate contacts.
In addition, Natural Resources Canada published an information sheet that includes an overview of
ESTMA's reporting requirements, information on enrolment,
details regarding payments made to Indigenous governments and
details regarding substitution with another jurisdiction's
publish-what-you-pay requirements. Currently, European Union and
European Economic Area member countries that have implemented the
EU Accounting and Transparency Directives have been determined to
be acceptable substitutes. Although not yet confirmed by Natural
Resources Canada, the proposed U.S. Securities and Exchange
Commission's transparency rules for resource extraction issuers
and Québec's Act respecting transparency measures in
the mining, oil and gas industries are also expected to be
Under ESTMA, reporting entities are not required to disclose
payments made to Indigenous governments until June 1, 2017.
Although the information sheet confirms that ESTMA will not require
the disclosure of impact and benefit agreements between reporting
entities and Indigenous governments, payments made under such
agreements must be considered with respect to ESTMA reporting
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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Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
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