Canada: Extracting Transparency: New Bill Creates Mandatory Reporting Standards For Canada’s Extractive Industries

Last Updated: November 10 2014
Article by Mark Morrison, Michael Dixon and Jamie Olsen


The Government of Canada recently introduced proposed legislation creating mandatory public reporting of payments to governments and government officials by the extractive sector. The proposed act, entitled the Extractive Sector Transparency Measures Act (ESTMA), is designed to further Canada's fight against corruption by enacting reporting obligations with respect to payments made to foreign and domestic governments (and government officials), eventually including aboriginal governments.

These proposed mandatory reporting requirements are in line with other countries implementing similar requirements, including the European Union and the United States. The EU has implemented a Transparency Directive, which contains provisions similar to the proposed ESTMA. The U.S. had initially implemented reporting standards through the Dodd-Frank Wall Street Reform and Consumer Protection Act, however, such provisions were struck down by the U.S. courts in 2013. The U.S. is anticipated to propose new legislation in early 2015, which is expected to be largely consistent with ESTMA.

This bulletin addresses the key elements and concepts of the proposed ESTMA.


The reporting obligations in ESTMA will apply to companies that are engaged in the commercial development of oil, gas or minerals in Canada or abroad and either (a) are listed on a stock exchange in Canada or (b) have a place of business in Canada, do business in Canada or have assets in Canada and meet at least two of the following size thresholds:

  • C$20 million in assets
  • C$40 million in revenue
  • Employ an average of at least 250 employees.

ESTMA is not restricted to Canadian-headquartered companies. Foreign companies can potentially be caught within the ambit of ESTMA where they have a place of business, do business or have assets in Canada and meet the size threshold. Where such foreign companies, either directly or indirectly through subsidiaries, engage in the commercial development of oil, gas or minerals anywhere in the world, they will likely be subject to Canadian reporting requirements.

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.


Where an entity is required to disclose payments under ESTMA, it will be required to provide the minister with, and make available to the general public, a report in a form to be prescribed indicating all payments made to a "payee" during a fiscal year in the following categories:

  • Taxes, other than consumption and personal income taxes
  • Royalties
  • Fees, including rentals, entry fees, regulatory charges and any other consideration for licensees, permits or concessions
  • Production entitlements
  • Bonuses
  • Dividends, other than dividends paid to ordinary shareholders
  • Infrastructure improvement payments
  • Any other category of payment that is prescribed by regulation.

Payments are required to be reported only where the aggregate amount to the same payee is greater than C$100,000, however, the minister is at liberty to alter the threshold amount for any particular category of payment by regulation.

The report is also to include an attestation made by a director, officer, independent auditor or accountant that the information contained in the report is true, accurate and complete.

The concept of a "payee" in ESTMA is broadly stated to apply to all types of government entities, including (a) any government in Canada or in a foreign state; (b) a body that is established by two or more governments (which is a similar concept to public international organizations in anti-corruption laws); and (c) any corporation or other body established to exercise or perform, or that exercises or performs, a power, duty or function of government.

Given the breadth of the definition of a "payee," ESTMA will also apply to payments to certain aboriginal bands, subject to a two-year transitional period for aboriginal bands in Canada.

Notably, and in furtherance of ESTMA's objective of detecting and deterring corruption, a payment that is made to an employee or public office holder of a government body is deemed to have been made to that government body, and must also be reported. Accordingly, ESTMA will require public disclosure of not only lawful payments to governments, but also payments that could potentially violate anti-corruption legislation such as Canada's Corruption of Foreign Public Officials Act (CFPOA).


ESTMA will require each entity to keep records of its payments made in a financial year for a period of seven years from the date that the entity provides the report to the minister or such other period as may be prescribed by regulations. This records retention obligation should be read in conjunction with section 4 of the CFPOA, which creates an offence for destroying accounting records earlier than permitted by law for the purpose of concealing bribery. Accordingly, non-compliance with record-keeping obligations under ESTMA may also be punishable by criminal sanction under the CFPOA if done for a bribery-related purpose.


The minister has broad information-gathering powers under ESTMA, including audit powers to compel any entity to provide information or documents. Additionally, the minister or his or her designate can access an entity's premises, inspect documents, require reports to be prepared and access IT systems to verify compliance with ESTMA. There is also a statutory obligation of cooperation imposed on the company and its employees. Notably, this could expand the ability of Canadian authorities to collect information about improper payments, as to date enforcement of Canadian anti-corruption legislation has been left to traditional criminal law information-gathering mechanisms such as search warrants.


ESTMA creates an offence for non-compliance with several of its provisions. Additionally, there is a general anti-avoidance provision making it an offence to structure any payment, or other financial obligation or gift, to avoid reporting requirements. These offences are subject to a maximum fine of C$250,000 for each day that the offence continues.


Where an entity commits an offence under ESTMA, any officer, director or agent who directed, authorized, assented to, acquiesced in or participated in its commission is also guilty of the offence. This would be subject to a defence of due diligence, where it would be open for the entity, or its directors and officers, to show that all reasonably prudent measures were implemented, which would typically include considerations such as:

  • Established policies and procedures
  • Adequate training
  • Monitoring to ensure effectiveness of policies and procedures
  • A system of internal controls to ensure accurate books and records
  • Audits of payment records.


In order to avoid the burden of dual-reporting requirements, ESTMA contains an equivalency provision that allows the minister to deem another jurisdiction's reporting standards as an acceptable substitute. In these circumstances, an entity could comply with ESTMA by complying with the other jurisdiction's reporting requirements and providing the minister with a copy of such reporting.


The government has stated that the mandatory reporting standards are expected to be in place by June 2015.


As the government moves to implement ESTMA in mid-2015, extractive sector companies that will be subject to ESTMA should consider whether any internal changes are necessary to ensure that record keeping and compliance systems are adequate to track and report payments, as will be required.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
30 Oct 2019, Other, Toronto, Canada

The materials on the Blakes Business Class website are provided for informational purposes only. Accessing this information does not create a lawyer-client relationship.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions