Mandatory Reporting Standards for the Extractive Sector


The Extractive Sector Transparency Measures Act (“the Act”) received Royal Assent on and was brought into force on . The Act delivers on Canada’s 2013 G8 commitment to contribute to global efforts against corruption in the extractives sector. The Act requires businesses involved in the exploration or extraction of oil, gas, or minerals to publicly report each year on specific types of payments made to all levels of government, in Canada and abroad.

Natural Resources Canada has developed implementation tools for the ESTMA, in consultation with industry, civil society organizations, as well as Aboriginal experts, and provinces.  These tools are now available for public comment until . The tools can be accessed on the Natural Resources Canada Extractive Sector Transparency Measures Act page.


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On , Prime Minister Stephen Harper announced that Canada will be establishing new mandatory reporting standards for Canadian extractive companies with a view to enhancing transparency on the payments they make to governments.

The new reporting standards will be established with a view to: improving transparency; ensuring Canada's framework is aligned with other G-8 countries and consistent with existing international standards, particularly those of the United States and the European Union; ensuring a level playing field for companies operating domestically and abroad; enhancing investment certainty; helping reinforce the integrity of Canadian extractive companies; and, helping to ensure that citizens around the world benefit from the natural resources in their country.

Between now and , the Government will work to develop the most effective vehicle for mandatory reporting.

How to Get Involved

Natural Resources Canada (NRCan) is engaging with interested parties to develop the new mandatory reporting standards, including provincial, territorial, and municipal governments, Aboriginal groups, industry, civil society, and the public.

The consultation paper provided below outlines a proposed approach to mandatory reporting. A presentation that summarizes the consultation paper is also provided.

Engagement Documents ( - )

Presentation: Developing Mandatory Reporting Standards for the Extractive Sector

Screenshot of the Presentation: Developing Mandatory Reporting Standards for the Extractive Sector


Consultation Paper


The Government of Canada made a commitment that by , mandatory reporting standards will be established. These would require Canadian extractive companies, consisting of oil and gas and mining sectors, to publish annual reports of payments of $100,000 and over on a project-level basis, made to all levels of government, including Aboriginal entities, both domestically and abroad.

Provincial/territorial securities regulators remain the preferred vehicle to implement the standards, but to ensure the Government of Canada meets its commitment, it will develop options including federal legislation that would allow for provincial/territorial equivalency.

The purpose of the consultation is to: 1) provide information on the proposed reporting standards; and 2) receive feedback on key reporting requirements, the proposed reporting process and other implementation issues.


The extractive sector is a driver of Canada's economy, generating 16.5 % of Canada's Gross Domestic Product (GDP) and close to 1.5 million jobs. Canada is a leader in transparency, accountability and good governance in the extractive sector which contributes both to a positive brand for the sector abroad and to international development objectives. Prime Minister Harper announced in that the Government will further strengthen its reputation as a leading jurisdiction by establishing mandatory reporting standards for Canadian extractive companies "with a view to enhancing transparency on the payments they make to governments."

The Government's commitment on mandatory reporting builds on a global trend promoting transparency reporting for extractive industries. Mandatory reporting for the extractive sector is being implemented in the U.S. through the Dodd Frank Act and in the European Union (EU) through its Transparency and Accounting Directives. The Government of Canada is aiming to align Canadian reporting requirements with those of the U.S. and EU to eliminate duplicative reporting to multiple jurisdictions, reducing the administrative and cost burden on governments and companies.

Beginning in , NRCan conducted consultations with provinces and territories, industry and civil society on behalf of the Government of Canada. Engagement sessions were also held with a number of Aboriginal groups (including national-level industry and political organizations).

The Government's approach to mandatory reporting standards, outlined below, has been informed by these consultations.

How would mandatory reporting work?

Who reports?

The reporting standards will apply to publicly-listed companies, as well as medium and large private extractive companies, operating or headquartered in Canada involved in the commercial development of oil, natural gas, and minerals (i.e., exploration, extraction, processing (primary), and export (transport out of country)). Companies involved with transport of resources within Canada would not be subject to the reporting requirements.

This approach is consistent with that taken by the EU. The U.S. reporting requirements will only apply to publicly listed extractive companies.

Consistent with the EU's Transparency Directive, medium and large private companies operating in Canada would be required to report if the company meets or exceeds two of the three following thresholds: $20 million CAD in assets; $40 million CAD in net turnover; and 250 employees. In the EU these thresholds are denominated in EUR.

In the U.S., mandatory reporting standards are being implemented through the U.S. Securities Exchange Commission. It is the decision of each EU member state as to how they implement the EU Transparency Directive (e.g., through legislation or securities regulators).

Who reports in cases of joint ownership, or subsidiaries?

Foreign and domestic companies (public as well as medium and large private firms) operating in Canada would be required to report if they have a controlling interest in any project in Canada or abroad. It is proposed that the Canadian reporting standards use the International Financial Reporting Standards (IFRS) definition of "control", "joint venture" and " joint operation" (IFRS 10 & 11).

"An investor consolidates an investee when it controls the investee. The investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. This principle applies to all investees, including structured entities. An investor must possess all of the following elements to be deemed to control an investee:

  • Power over the investee, which is described as having existing rights that give the current ability to direct the activities of the investee that significantly affect the investee's returns (such activities are referred to as the 'relevant activities');
  • Exposure, or rights, to variable returns from its involvement with the investee; and
  • Ability to exert power over the investee to affect the amount of the investor's returns."

What is reported?

The reporting standards would capture extractive companies' payments of $100,000 or more (i.e., either cumulative over the year or one-time payments) to all levels of government, domestically and internationally, for each of the categories below.

Payments to Aboriginal entities by extractive companies would also be captured by the reporting standards, including relevant payments in Impact Benefit Agreements.

Consistent with the approach taken by the U.S. and the EU, it is proposed that the following categories of payments be reported:

  • taxes levied on the income, production or profits of companies, excluding consumption taxes;
  • royalties;
  • fees, including licence fees, rental fees, entry fees and other considerations for licences and/or concessions;
  • production entitlements (e.g., including payments made in-kind);
  • bonuses, such as signature, discovery and production bonuses;
  • dividends paid in lieu of production entitlements or royalties (excludes dividends paid to governments as ordinary shareholders); and
  • payments for infrastructure improvements (e.g., roads, electricity, etc.).

Reporting would be done at the project-level. Similar to the U.S. model, it is proposed that a project be defined as an operational activity performed by an extractive company, the parameters of which are defined by the company according to its particular industry and business context. (e.g., an oil field, individual well, mining site, etc.).

On a voluntary basis, companies may choose to disclose smaller payments (e.g., at a threshold of $10,000).

What is not reported?

Consistent with the U.S. and the EU, it is proposed that companies not be required to report social payments (e.g., for community centres, schools, hockey teams, arenas, capacity development, training).

What is the reporting process?

To reduce administrative burden and costs, company reports would ideally use a common reporting template that would be accepted in other jurisdictions (e.g., the U.S. and EU). The Government is working with the U.S. and European Commission to ensure that the template is similar.

Should federal legislation be enacted, companies would post reports annually on their corporate websites in eXtensible Business Reporting Language (XBRL), where the information would be available for free and unrestricted use by the public. Companies would issue a public notice confirming that they have complied with their reporting obligations. Companies would then inform the Government of Canada that they have both issued the public notification and met their obligations. A link could be made to these corporate websites on the Treasury Board Secretariat's Open Government website (

Allowing for the posting of reports on corporate websites will enable firms to provide context for their reports.

How would reports be verified?

Companies would ensure that the information they provide be assured/verified by a third party, according to recognized accounting standards.

Should federal legislation be enacted, an audit of selected companies would be conducted annually under the direction of Government of Canada officials. A compliance mechanism would be foreseen for non-reporting and reporting which purposefully misrepresents the data.

Equivalency and Substitutability of Reporting

To minimize the administrative and cost burden, the reporting standards would be drafted to allow equivalency with similar standards, such as the Dodd-Frank Act and the EU Transparency Directive, or an equivalent standard introduced by provinces/territories. The intent is to enable companies operating in multiple jurisdictions with mandatory reporting standards, to produce a single report.

A review process would ensure continued alignment with such standards.


There may be scenarios where a company's obligation to report under the new mandatory reporting standards conflicts with a host country's law prohibiting disclosure of such information.

The EU and the U.S. considered this issue. The EU came to the decision that there would be no exemptions granted to reporting requirements. The 1504 regulations under the U.S. Dodd-Frank Act had stated that there would be no exemptions. However, the regulations were successfully challenged as a District Court concluded that a sufficient rationale was not provided as to why no exemptions would be granted. The U.S. Security Exchange Commission (SEC) has not yet responded.

Another possible scenario is a conflict between the legal obligation to report under the mandatory reporting standards and a confidentiality clause in a contract.

It is proposed that no exemptions for reporting be granted in Canadian standards.


2014 consultations will build on those undertaken in 2013.

- Stakeholder consultations (face-to-face and via videoconference and teleconference).
Consultation materials posted on the Treasury Board Secretariat's Open Government website for stakeholder comment.   Summaries of consultations will be available on the Treasury Board website.
The mandatory reporting section of the Treasury Board Secretariat's Open Government website is closed for stakeholder input; consultation materials will remain on the site.

If equivalent standards are not implemented by provinces and territories, the federal government will enact legislation by to move this initiative forward. It is anticipated that the legislation will follow the following timeline:

  • Legislation is drafted;
  • Legislation introduced in the House of Commons; 
  • Legislation considered by Parliament;
  • – Regulations developed; and
  • – Legislation enacted.

Questions for Consultation:

General Considerations

  • How could public information on extractive company payments benefit extractive companies, the public and Aboriginal communities?
  • What should be some of the considerations for the Government of Canada in its communications?

Companies required to report

  • Private companies will be subject to the reporting requirements as required under the EU Transparency Directive. What are the implications of using these criteria?

Types of Payments

  • It is proposed that company payments to the following types of Aboriginal entities be captured by the reporting standards:
    • Aboriginal organizations or groups with law-making power and/or governance mechanisms related to the extractive sector (i.e., mining, oil and gas);
    • provincially or federally incorporated Aboriginal organizations that undertake activities in the extractive sector on behalf of their beneficiaries
    • Aboriginal organizations or groups that are empowered to negotiate legally binding agreements (e.g., impact benefit agreements) on behalf of their members.
  • How should payments to foreign indigenous entities be captured?

Potential for a conflict of laws

  • What is the potential for conflict between the proposed mandatory reporting standards with host country laws prohibiting disclosure? What are potential mechanisms or strategies to address conflicts?
  • What is the potential for a conflict between contract law and the proposed mandatory reporting standards? How should confidentiality clauses in Impact Benefit Agreements be addressed?


  • What is the best way to ensure equivalency with standards in other jurisdictions?
  • What should be the elements/format of a common reporting template?
  • Accurate reporting of payments will be important to the integrity of this initiative. What measures need to be in place to ensure that there is no double-counting?


  • What are implications of imposing penalties for non-reporting and purposeful misrepresentation of data?

Reporting Process

  • What is a practical template and when should annual reports be due?
  • How could the reports be made accessible to the public? In particular, how could the information be made easily available to Aboriginal groups and communities?
  • What would be the easiest way for companies to notify both the Government of Canada and the public that they have met their reporting obligations?

Verification process

  • What is the viability of having the reporting data third-party verified?

What we heard

Review the comments received in response to the Consultation on Mandatory Reporting Standards for the Extractive Sector.