Following Prime Minister Harper’s commitment at the June 2013 G8 Leaders’ Summit to contribute to global efforts of deterring corruption and promoting transparency in the extractive sector, the Government of Canada enacted the Extractive Sector Transparency Measures Act (ESTMA) as part of the Economic Action Plan 2014. This Act comes into force on June 1, 2015.
The Act applies to businesses engaged in the commercial development of oil, gas, or minerals (e.g., exploration or extraction activities) that are either a) listed on a stock exchange in Canada or b) doing business in Canada and meet two of three size-related criteria in one of their two most recent financial years: (1) at least $20 million in assets, (2) $40 million in revenue, (3) employs an average of 250 employees.
The Act requires reporting entities to report annually on specific payments (e.g., taxes, fees, royalties, production entitlements, bonuses, dividends) of $100,000 or more made to any level of government in Canada and abroad. Reporting entities will be required to submit reports for each of their financial years that begin after June 1, 2015.
The reports must also be made publicly accessible by the reporting entity. This includes payments made by industry to Aboriginal or indigenous governments. The Act includes a two-year deferral (to June 1, 2017) of the obligation to report payments made to Aboriginal governments in Canada.
These measures are similar to emerging international mandatory reporting requirements for the extractive sector (e.g., the United States, the European Union). The Act also provides the Government of Canada to allow reporting entities to substitute reports prepared in another jurisdiction (whose requirements are determined to be an acceptable substitute by the Minister of Natural Resources Canada) to meet Canada’s requirements. The assessment of measures taken in other jurisdictions is currently in progress.
From the earliest stages of developing the Act, Natural Resources Canada has met with almost 70 extractive companies and their associations, more than 80 Aboriginal organizations, and almost 30 civil society organizations. In addition, the Department considered more than 45 written submissions from these constituencies, as well as investors and private citizens. From these discussions, governments agreed to defer by two years the requirement for the oil, gas and mining industries to report their payments made to Aboriginal governments. The Government will continue its engagement on the implementation of the Act, including with Aboriginal peoples.
Alexandra Lemieux
Press Secretary
Office of Canada’s Minister of Natural Resources and
Minister for the Federal Economic Development Initiative for Northern Ontario
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