Apr. 03, 2020 - In an article posted to our website on March 18, 2020, we discussed the potential for the recovery of property and business interruption losses arising from the COVID-19 epidemic. Our advice then was that while the pandemic would likely be considered a fortuity, it was uncertain whether, in the...
Transparency Requirements Proposed for Payments by Canada’s Extractive Industry
In the face of a global trend for greater corporate transparency, the Government of Canada recently introduced its long-promised legislation to establish mandatory reporting standards for payments that Canadian extractive companies make to governments worldwide. Click here to read our January 22, 2014 publication on this topic. Click here to read the full Extractive Sector Transparency Measures Act.
The Extractive Sector Transparency Measures Act (the Act) will apply to oil, gas and mining companies that are listed on a Canadian stock exchange, as well as to private companies operating in Canada that meet at least two of the following criteria: $20 million in assets; $40 million in revenue; or 250 employees. Entities subject to the Act will be required to file an annual public report disclosing any payments to governments in excess of $100,000 (or an amount otherwise prescribed by regulation). Payments will include taxes, royalties, regulatory charges and infrastructure improvement payments. Reporting of payments is expected to be on a project-by-project basis to align Canada’s requirements with other G8 countries. Additional guidance will need to be provided in the Act or regulations regarding the reporting of taxes, which are currently defined to simply mean “taxes, other than consumption taxes and personal income taxes.”
The Act follows through on the Government of Canada’s 2013 commitment to establish mandatory reporting standards, with a view to ensuring Canada’s reporting framework is consistent with existing international transparency standards and aligned with other G8 countries. At that time, the European Parliament had already approved transparency rules for public and large private extractive and logging companies, requiring them to publicly disclose the payments they make in excess of €100,000 to governments on a project-by-project basis. The United States Securities and Exchange Commission adopted similar transparency rules under the Dodd-Frank Act that required publicly listed extractive companies to file an annual report disclosing payments to governments on a project-by-project basis. While the SEC’s transparency rules were overturned in 2013 as a result of deficiencies in its rule-making process, they are expected to be reissued by March 2015.
As expected, the Act will allow for the substitution of the Government of Canada’s payment reporting requirements with those of another jurisdiction. This equivalency clause, which is also found in the European Union rule, would allow companies to publish a report on the basis of the mandatory requirements of another country (or a province or territory), provided that these are considered equivalent to the Canadian requirements. This clause aims to minimize the administrative burden that could result from multiple reporting obligations. Common reporting formats are expected for Canada, the United States and the European Union to further harmonize mandatory reporting standards.
While the Government of Canada had proposed that its mandatory reporting standards would include payments to Aboriginal entities, which is unique to the Canadian reporting requirements, the Act will delay reporting of payments made by an extractive company to an Aboriginal government in Canada for two years to allow for additional consultation. Extractive companies will want to consider how these reporting requirements will affect confidentiality requirements in existing and future revenue sharing agreements with Aboriginal communities.
The Act is expected to be passed by April 1, 2015 and implemented by mid-2015. As a result, extractive companies will need to ensure their compliance systems are able to track and record relevant payments to governments. Further, while Canada’s reporting requirements are expected to be broadly similar to those in the United States and the European Union, dual listed companies will want to confirm compliance in all jurisdictions until a consistent global reporting standard emerges.
Apr. 02, 2020 - Businesses, regardless of size, charities and non-profit organizations whose revenues have decreased by at least 30% because of the COVID-19 pandemic are now eligible to apply for the Canada Emergency Wage Subsidy. The subsidy is retroactive to March 15, 2020 and covers up to 75% of wages (up to...