On June 11, 2015, Quebec's Minister for Mines introduced a bill before the Quebec National Assembly that proposes to impose mandatory reporting requirements on businesses operating in the mining and oil and gas sectors. The bill, titled An Act respecting transparency measures in the mining, oil and gas industries (Bill 55), would require subject entities to declare all payments made to government bodies and eventually to aboriginal communities. Bill 55 mirrors closely the Extractive Sector Transparency Measures Act, adopted by the Canadian government, which came into force on June 1, 2015. For more information, see our November 2013 Blakes Bulletin: Extracting Transparency: New Bill Creates Mandatory Reporting Standards for Canada's Extractive Industries and our June 2015 Blakes Bulletin: Update: Extractive Sector Transparency Measures Act Now in Force.
The stated purpose of Bill 55 is to impose transparency measures in the mining and oil and gas industries, discouraging and detecting corruption and fostering the social acceptability of projects. The government has also stated that by introducing Bill 55, it is seeking to affirm its legislative power over natural resources.
If adopted, the Act would apply to an entity that is either engaged in the exploration or development of mineral substances or hydrocarbons; that holds a permit, lease or other authorization to carry out such activities; or that controls an entity engaged in such activities, if any of the following requirements are met:
- The entity is listed on a Canadian stock exchange and has its head office in Quebec
- The entity has an establishment,
exercises activities or has assets in Quebec, and based on its
consolidated financial statements, during one of the previous two
fiscal years, meets at least two of the following thresholds:
- It has C$20-million in assets
- It has C$40-million in revenues
- It employs an average of at least 250 employees
Entities subject to the Act would be required to provide a statement to the Autorité des marchés financiers annually declaring all payments and payments in kind made to the same "payee" if their total value exceeds C$100,000. "Payee" is defined broadly to include:
- All levels of government, including municipalities
- A body established by two or more governments
- An entity established to exercise the powers and duties of government
- An aboriginal nation or an aboriginal community
- Employees or public office holders of any of the above
The annual statement is to be certified by a director or officer of a reporting entity or by its outside auditor. Moreover, reporting entities will be required to retain records of all payments made for a period of seven years.
So as to avoid duplication, given the strong similarities with the federal legislation, Bill 55 provides that regulations may be adopted to allow an entity to file, instead, a statement filed with another competent authority, which is likely intended to include the federal government.
Bill 55 provides for administrative monetary penalties that are set for a legal person at either C$1,000 or C$10,000, which may be imposed every day the violation continues. The Minister of Energy and Natural Resources is expected to develop and make public a framework for applying administrative monetary penalties. Directors and officers of a reporting entity may be liable if an entity fails to pay an administrative monetary penalty unless they establish that they exercised due diligence to prevent the violation that resulted in the penalty.
In addition, failure to comply with the Act, may lead to penal proceedings with a maximum fine of C$250,000 for each day that the offence continues.
If Bill 55 is adopted, the requirement to report payments made to an aboriginal nation or an aboriginal community will be delayed until June 1, 2017. Regulations and guidelines are expected, which should provide more details on these new reporting obligations.
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.