On June 1, 2015, Greg Rickford, the Minister of Natural Resources, announced that the coming into force immediately of the Extractive Sector Transparency Measures Act (the Act)
The Act requires certain entities with connection to Canada, that are engaged in commercial development of oil, gas or minerals in Canada or elsewhere, or that control such entities, to report payments made to any government, whether foreign or domestic, in excess of $100,000 in a given year. These reports are to be made available to the public. For a detailed discussion on the types of entities that have to comply with the requirements of the Act, the nature of the reporting obligations and the categories of payments covered by the Act, please refer to our February 25, 2015 Osler Update.
Reports must be filed annually within 150 days of the end of each financial year of any entity subject to the Act . However, the Act provides that reporting is not required for the year in which the Act comes into force, or for any prior year. As an example, a company with fiscal year ending on December 31, 2015 will be obligated to report payments made from and after January 1, 2016 with its first report to be filed by May 30, 2017.
In addition, the reporting of payments made to Aboriginal governments or entities will be deferred for a two-year period following the date that the Act comes into force, so the obligation to report such payments do not apply until June 1, 2017.
While the coming into force of the Act confirms when the reporting obligations commence, the precise nature of the reporting obligations and the format for the reports to be delivered under the Act remain undefined. The Act provides that the Minister may prescribe these requirements in writing, and accordingly, we expect that guidelines or regulations setting out details of the reporting requirements are likely to be forthcoming.
Companies subject to the reporting obligations must start planning for and implementing proper systems, policies and procedures to track payments to governments subject to the reporting and compliance obligations under the Act, so they are able to file annual reports in a timely and accurate manner.