In line with a global trend for greater transparency of payments
made by companies in extractive industries to governments of
resource-rich countries, the United States has joined Canada and
the European Union in adopting "publish what you pay"
rules for such companies. These rules are aimed at combatting
corruption and promoting the accountability of these governments to
Canada's "publish what you pay" rules are
implemented under the Extractive Sector Transparency Measures
Act (ESTMA). Reporting entities subject to ESTMA are required
to report payments related to the commercial development of oil,
gas or minerals made to governments worldwide for financial years
beginning after June 1, 2015. Reports are due within 150 days of
the end of each financial year. 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 established a two-step enrolment process, which includes the
submission of a Contact Form.
On June 27, 2016, the United States Securities and Exchange
Commission (SEC) adopted its "publish what you pay" rules
under the Dodd-Frank Wall Street Reform and Consumer Protection
Act (Dodd-Frank). The rules mark the SEC's second attempt
to adopt transparency rules under Dodd-Frank: the U.S. District
Court for the District of Columbia vacated the initial rules
adopted by the SEC in 2012.
The SEC's rules require resource extraction issuers to file
annual reports on Form SD, disclosing payments made to governments
worldwide for financial years beginning on or after September 30,
2018. A resource extraction issuer is defined to include any
company that is required to file annual reports on Forms 10-K, 20-F
or 40-F with the SEC and is engaged in the commercial development
of oil, natural gas or minerals. The rules do not provide
exemptions based on size, ownership, foreign private issuer status
or the extent of business operations constituting commercial
development of oil, natural gas or minerals. In contrast to the
Canadian and European Union rules, the SEC's rules do not apply
to large private companies.
Reports under the SEC's rules are due within 150 days of the
end of the applicable financial year and require disclosure of
payments on a project-by-project basis, subject to a de
minimis payment threshold of US$100,000 (whether a single
payment or a series of related payments). The report must include
payments such as taxes, royalties, fees, production entitlements,
bonuses, community and social responsibility payments, dividends
and payments for infrastructure improvements.
The SEC's rules include two exemptions that provide for
transitional relief or delayed reporting in limited circumstances.
These exemptions provide a longer transition period for recently
acquired companies that were not previously subject to reporting
under the rules and a one-year delay in reporting payments related
to exploratory activities. In addition, resource extraction issuers
may apply for, and the SEC will consider, exemptive relief for
other situations on a case-by-case basis (e.g., when a
foreign government prohibits the disclosure of payments made to
The SEC's rules allow for the substitution of the SEC's
disclosure requirements with those of another jurisdiction so long
as the SEC determines that the requirements of the other
jurisdiction are "substantially similar". Concurrent with
its announcement of the new rules, the SEC issued an order stating
that ESTMA and the European Union's rules are
"substantially similar". As a result, resource extraction
issuers that are also reporting entities under ESTMA are expected
to be able to use their ESTMA reports to satisfy the SEC's
As with the SEC's rules, ESTMA also allows for substituted
reporting. Currently, only reports submitted to European Union and
European Economic Area member countries that have implemented the
European Union's rules are acceptable substitutes under ESTMA.
Natural Resources Canada is conducting a substitution review of the
SEC's rules and we expect a favourable outcome, enabling
reporting entities under ESTMA that are also resource extraction
issuers to use their reports filed with the SEC to satisfy ESTMA
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.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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