Over the last few years, a number of key jurisdictions have adopted regulations requiring companies engaged in natural resource extraction activities to disclose the payments they make to governments and state-owned companies. These regulatory initiatives, commonly referred to as "publish what you pay" rules, aim to promote fiscal transparency in the natural resources sector.

This client publication provides an overview of the current status of the adoption of "publish what you pay" laws, and the rules and regulations implementing those laws, in four key jurisdictions: the United States, the European Union, Canada and Australia. This publication also aims to offer some initial observations regarding how the reporting framework in each of these jurisdictions applies, or will apply once in effect, to companies, as well as some of the principal ways in which these frameworks are aligned with each other and how they differ.

While the United States was the first major jurisdiction to enact "publish what you pay" legislation, it still does not have rules in effect implementing the requirements for US reporting companies. Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), which was signed into law in 2010, directed the US Securities and Exchange Commission ("SEC") to issue rules requiring resource extraction issuers to report annually on payments made to governments. In August 2012, the SEC adopted a final rule implementing Section 1504 of the Dodd-Frank Act, but in July 2013 the SEC rule was vacated by US federal courts. The SEC has yet to propose a new rule implementing "publish what you pay" reporting under Section 1504 of the Dodd-Frank Act and has indicated that it may take until Spring 2016 to do so.

In drafting revised rules, the SEC staff will likely be informed by the reporting regimes adopted in other jurisdictions, and it seems likely that the SEC will act to revise its previous rule narrowly to specifically address the deficiencies identified by the court ruling invalidating its previous rulemaking attempt. Accordingly, in the context of comparing the US reporting regime to other jurisdictions, it is useful to look at the statutory provisions of Section 1504 and the final rule previously adopted by the SEC, although this rule is not in effect and it is possible that the "publish what you pay" rules ultimately adopted by the SEC may differ in significant respects.

Meanwhile, in Europe, in June 2013 the European Parliament and the Council of the European Union adopted Directive 2013/34/EU, commonly referred to as the EU Accounting Directive. The EU Accounting Directive requires Member States to enact implementing legislation by July 20, 2015, with the provisions first to apply in respect of financial years beginning on January 1, 2016 or during calendar year 2016. In the UK, the implementing legislation is The Reports on Payments to Governments Regulations 2014, which came into force on December 1, 2014 and is effective in relation to a company's financial year beginning on or after January 1, 2015. Norway has also passed government payments reporting legislation, which took effect from January 1, 2014.

Australia and Canada, which both have significant natural resource sectors, are also on the way to implementing "publish what you pay" rules. In Canada, "publish what you pay" legislation received royal assent in December 2014, in the form of the Extractive Sector Transparency Measures Act, which will come into force at a date to be determined by the Governor in Council. The Government had previously indicated its intention to proclaim the Act into law in the spring or summer of 2015, however, no official date for proclamation has been announced. In Australia, the Corporations Amendment (Publish What You Pay) Bill 2014 (Cth) was introduced into the Senate in October 2014 and would need to be passed by both houses of the Australian Federal Parliament in order to be made law.

These laws and regulations are all largely based on the principles established by the Extractive Industries Transparency Initiative ("EITI"), as set forth in the EITI Standard.1 EITI is a voluntary association comprising a broad range of stakeholders, including representatives of resource-rich developing countries; supporting countries; international and domestic oil, gas and mining companies; civil society members; and investor representatives. The EITI Standard was established in 2003 to promote and support improved governance in resource-rich countries through the full publication and verification of payments by companies and revenues to government from the oil, gas and mining sectors.

Countries implementing the EITI Standard publish reports that disclose the revenues from extraction of the country's natural resources. Companies report payments to government (taxes, royalties, etc.), and the government reports what it has received.

These two sets of figures are compiled and reconciled by an independent reconciler, chosen by the country, and published in the country's EITI report.

National "publish what you pay" regulation complements the EITI framework by requiring disclosure by companies of payments made to governments wherever those companies engage in extractive activities. Because the reporting regimes in each jurisdiction are based on the EITI principles, they tend to be aligned to a significant extent. However, the rules vary from country to country in certain aspects, and many companies will be subject to "publish what you pay" reporting in more than one jurisdiction. Unless an equivalency exemption is available, such as provided in the EU framework, such companies will need to take a "highest common denominator" approach to ensure compliance with each reporting regime. The table appended at the back of this client publication presents a comparison of the US (vacated rules), EU, Canadian and EITI rules.

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1. https://eiti.org/document/standard

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