​Business Crimes, Investigations & Compliance

The Extractive Sector Transparency Measures Act (ESTMA) came into force on June 1, 2015. ESTMA is designed to reduce international corruption by enacting reporting obligations with respect to payments made to foreign and domestic governments (and government officials), and eventually aboriginal or indigenous governments.
As set out in our November 2014 Blakes Bulletin: Extracting Transparency: New Bill Creates Mandatory Reporting Standards for Canada’s Extractive Industries, ESTMA’s reporting requirements apply to companies engaged in the development of oil, gas or minerals that are either (a) listed on a Canadian stock exchange or (b) have a place of business in Canada, do business in Canada or have assets in Canada, and which meet at least two of the following size thresholds:
  • C$20 million in assets
  • C$40 million in annual revenue
  • Employ an average of at least 250 employees
The reporting requirements also encompass payments made by a foreign company that is controlled by a company listed in Canada or that has a place of business, does business or has assets in Canada and meets the size threshold. The notion of control is broadly defined to include direct or indirect control by any means.
Companies subject to ESTMA are required to report and publicly disclose all payments, including taxes, royalties, fees and any other consideration for licensees, permits or concessions in excess of C$100,000 (or such other threshold set by regulation) to a “payee.” “Payee” is defined broadly to include:
  • All levels of government in Canada and abroad
  • Any corporation or other body established to exercise or perform — or that exercises or performs — a power, duty or function of government
  • An employee or public office holder of the foregoing
Given the breadth of the definition of a “payee,” ESTMA will apply to payments to certain aboriginal governments, subject to a two-year transitional period for aboriginal governments in Canada.
ESTMA requires a director, officer, independent auditor or accountant of a reporting company to attest that the information contained in the report is true, accurate and complete.
Non-compliance with the reporting requirements is an offence. Any director or officer who directed, authorized, assented to, acquiesced in or participated in the non-compliance can also be held personally liable, subject to a defence of due diligence. These offences are subject to a maximum fine of C$250,000 for each day that the
non-compliance continues.
ESTMA will apply to financial years that begin after June 1, 2015. Reports must be made within 150 days after the end of the company’s financial year. As noted above, however, payments made by companies to aboriginal governments in Canada before June 1, 2017 will not need to be disclosed or reported. The precise form of required reporting and other matters will be addressed in Ministerial guidelines that will likely be circulated for public comment this summer.
For further information, please contact:
Mark Morrison        403-260-9726
Michael Dixon        403-260-9786
Roy Millen              604-631-4220
or any other member of our Business Crimes, Investigations & Compliance group.
Tags: Aboriginal Law, Africa, Business Crimes, Investigations & Compliance, China, Energy, Latin America, Mining, Oil & Gas, United States

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