The Québec National Assembly adopted Bill 55: An Act respecting transparency measures in the mining, oil and gas industries recently. Bill 55 came into force on October 21, 2015. The content of Bill 55 was summarized in our August 4, 2015 newsletter.
The purpose of Bill 55, which was originally tabled before the National Assembly on June 21, 2015, is to impose transparency measures by making it mandatory for mining, oil and gas enterprises to declare the monetary payments, or payments in kind, they make in connection with their natural resource exploration and development projects.
Bill 55 was tabled in the context of the Government of Québec’s willingness to assert its jurisdiction in natural resources, following the Government of Canada’s adoption of the Extractive Sector Transparency Act (see our July 13, 2015 report on Bill C-43).
In August 2015, Bill 55 was submitted to special consultations and public hearings by the Committee on Agriculture, Fisheries, Energy and Natural Resources (the CAPERN). Further to the detailed study of Bill 55, which took place in September 2015, the CAPERN adopted a number of amendments to the bill that were integrated into the text of An Act respecting transparency measures in the mining, oil and gas industries (the Act), which the National Assembly adopted.
Key amendments and clarifications
The following key amendments were made to the Act since the June 21, 2015 version of Bill 55 was tabled before the National Assembly:
1. Application of the CA$100,000 threshold to payments made within a same category of payment to the same payee, rather than to the total payments made to said payee.
This amendment to Article 6 of Bill 55 is undoubtedly the most important amendment that was made by the Parliamentary Committee.
The June 21 version of Bill 55 provided that entities subject to the Act must file an annual statement with the Autorité des marchés financiers (the AMF) in which they declare all payments made to the same payee in a given fiscal year if those payments total CA$100,000 or more.
The Act clarifies that the CA$100,000 threshold applies, in fact, by category of payment, namely taxes and income taxes; royalties; fees (including rental fees, entry fees, regulatory charges, etc.); production entitlement; dividends; bonuses; contributions for infrastructure construction or improvements; or any other category of payment determined by regulation. Applying the threshold as clarified in the amendment will lead to a reduction in the number of annual statements filed by the entities subject to the Act.
The fact that the CA$100,000 threshold also applies by category of payment under the Québec legislation will facilitate the substitution of the annual statement by a statement made in accordance with the requirements of another competent authority, particularly by one filed under federal laws that provides for the same reporting threshold. The Act provides that the government may determine, by regulation, the requirements of such an authority as an acceptable substitute, if the requirements have the same objectives as those of the Act.
When Bill 55 was adopted, Minister for Mines Mr. Luc Blanchette pointed out that several states already had similar laws, namely Great Britain, France and Norway. He also mentioned that other countries of the European Union would soon be adopting similar laws, pursuant to the EU Directive on the harmonization of transparency requirements. In short, it appears from Mr. Blanchette’s comments that the government hopes to avoid duplicating statements to be filed by entities subject to the Act.
2. Clarification that trusts are subject to the Act
The term "trust" has been added to various articles outlining which types of entities are subject to the obligations stipulated in the Act. This amendment clarifies that trusts are subject to the Act in the same way as legal persons, corporations or any other organizations engaged in the exploration or development of mineral substances or hydrocarbons. Trusts are also subject to the Act as payees who have received payment under the Act. In short, choosing a trust as the designated legal vehicle will not prevent the application of the Act, whether it is as an entity subject to the Act or as a payee.
3. Addition of certain presumptions with respect to payments
Article 7, which provides for certain presumptions with respect to payments made by entities subject to the Act, was amended to clarify that payments made by any intermediary on behalf of an entity subject to the Act, are deemed to have been made by that entity, and to add the presumption that any payment made to a board, commission, trust, corporation or other body that exercises—or that was established to exercise—public powers or duties for a payee, is deemed to have been made to that payee.
4. The Minister responsible for the application of the Act is required to table a five-year report on the implementation of the Act in the National Assembly.
Article 51 provides for the obligation to report to the government on the implementation of the Act and the advisability to amending it. The obligation to table this report every five years in the National Assembly was added to take into consideration a comment made by the Auditor General of Québec during the special consultations on the Bill and aims to achieve continuous improvement. This type of provision can also be found in other Québec laws.
Finally, it should be noted that the Government designated the Minister of Energy and Natural Resources as responsible for the application of the Act.
While the Act is now in force, the mining, oil and gas industries are waiting for the publication of the regulations, which will provide the form of the annual statement—including the manner in which the payments must be presented or broken down, and the procedure for sending the statement—as well as the substitution requirements. We will follow the publication of any regulations made under the Act with interest.
For more information, please consult a copy of the Act.