Bill C-474: An Act respecting the promotion of financial transparency, improved accountability and long-term economic sustainability through the public reporting of payments made by mining, oil and gas corporations to foreign governments

C-474 First Session, Forty-first Parliament, 60-61-62 Elizabeth II, 2011-2012-2013 HOUSE OF COMMONS OF CANADA BILL C-474 An Act respecting the promotion of financial transparency, improved accountability and long-term economic sustainability through the public reporting of payments made by mining, oil and gas corporations to foreign governments first reading, February 26, 2013 NOTE 2nd Session, 41st Parliament This bill was introduced during the First Session of the 41st Parliament. Pursuant to the Standing Orders of the House of Commons, it is deemed to have been considered and approved at all stages completed at the time of prorogation of the First Session. The number of the bill remains unchanged. Mr. McKay 411393 SUMMARY This enactment requires mining, oil and gas corporations to submit annual transparency reports that disclose all payments provided by them or their subsidiaries to a foreign government for the purpose of furthering mining, oil or gas industry activities. It also makes it an offence to fail to comply with this requirement and establishes a penalty for such contravention. Available on the Parliament of Canada Web Site at the following address:http://www.parl.gc.ca 1st Session, 41st Parliament, 60-61-62 Elizabeth II, 2011-2012-2013 house of commons of canada BILL C-474 An Act respecting the promotion of financial transparency, improved accountability and long-term economic sustainability through the public reporting of payments made by mining, oil and gas corporations to foreign governments Preamble Whereas Canada strongly supports international efforts to fight corruption, encourage transparency and promote increased accountability; Whereas Canada officially supports the Extractive Industries Transparency Initiative (EITI), an international coalition of governments, industries, investors and international and non-governmental organizations that advocates for improved governance through the full publication and verification of payments made to governments by mining, oil and gas corporations and government revenues from those corporations; Whereas Canadians recognize that proper natural resource management is enabled by transparency and the regular publication of information on public resources and reve-nues, which allows investors to properly assess risk, governments to monitor company compliance and citizens to see the value placed on their natural resource assets; Whereas Canada and Canadians accept the EITI principle that the prudent use of natural resource wealth should be an important en- gine for sustainable economic growth that contributes to sustainable development and poverty reduction, but that, if not managed properly, it can have negative economic and social impacts; Whereas Canada’s Sustainable Economic Growth Strategy advocates increased transparency to aid in promoting international development by fostering a stable foundation for viable business and industries to thrive and in helping to maximize the contribution of growth to the public resources available for investment in the welfare of the population by promoting sound fiscal, financial and economic management; Whereas Canada has ratified the United Nations Convention against Corruption, which requires States Parties to take measures to promote the transparency of private entities and to ensure the public has effective access to information; Whereas Canada is a signatory to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, which came into force in Canada with the adoption of the Corruption of Foreign Public Officials Act; Whereas Canada is a signatory to the G8 Declaration: Renewed Commitment for Freedom and Democracy and a party to the G8/Africa Joint Declaration: Shared Values, Shared Responsibilities, both issued at the G8 Summit of Deauville in 2011, and thus welcomes efforts to increase revenue transparency and is committed to setting in place transparency legislation that requires mining, oil and gas corporations to disclose the payments they make to foreign governments; Whereas Canada recognizes that extractive revenue transparency will improve the business climate in which the Canadian extractive industry operates by helping Canadian investors to manage the risks of investing in the extractive industry abroad; And whereas Canada recognizes that promoting transparency will improve the competitive advantage of Canadian companies operating abroad by further enhancing the reputation of Canada’s extractive sector; Now, therefore, Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows: SHORT TITLE Short title 1. This Act may be cited as the Transparency of Payments Made by Mining, Oil and Gas Corporations to Foreign Governments Act. PURPOSE Purpose 2. The purpose of this Act is to promote financial transparency, improved accountability and long-term economic sustainability by publishing payments made to foreign governments by mining, oil and gas corporations. INTERPRETATION Definitions 3. The following definitions apply in this Act. “Canadian corporation”« société canadienne » “Canadian corporation” means, for the purposes of this Act, an entity that has been incorporated under the laws of Canada or a province or that is considered to be resident in Canada under the Income Tax Act or any applicable tax treaty. “EITI”« ITIE » “EITI” means the coalition of governments, industries, investors and international and non-governmental organizations that constitutes the Extractive Industries Transparency Initiative and that advocates for improved governance through the full publication and verification of payments made to governments by mining, oil and gas corporations and government revenues from those corporations. “EITI Rules”« Règles de l’ITIE » “EITI Rules” means the rules established by the EITI Board for the purpose of implementing the EITI and published on the EITI website as the EITI Rules, 2011 Edition. “extractive corporation”« société extractive » “extractive corporation” means any Canadian corporation that engages in international mining, oil or gas industry activities, either directly or through a subsidiary. “extractive project”« projet d’extraction » “extractive project” refers to any oil, natural gas or mineral exploration, development, production, transport, refining or marketing activity from which payments above the not-negligible threshold originate, that is governed by a lease, concession or similar legal agreement. “foreign government”« gouvernement étranger » “foreign government” means the government of a foreign state or the government of a political subdivision of a foreign state and includes (a) any department or branch of a foreign government; (b) any agency of a foreign government; (c) any corporation that is at least majority-owned, directly or indirectly, by a foreign government; and (d) any foreign public official acting in their official capacity. “foreign public official”« agent public étranger » “foreign public official” means (a) a person who holds a legislative, administrative or judicial position of a foreign state; (b) a person who performs public duties or functions for a foreign state, including a person employed by a board, commission, corporation or other body or authority that is established to perform a duty or function on behalf of the foreign state, or is performing such a duty or function; and (c) an official or agent of a public international organization that is formed by two or more states or governments or by two or more such public international organizations. “gas”« gaz » “gas” has the same meaning as in section 2 of the Canada Oil and Gas Operations Act. “mineral resources”« ressources minérales » “mineral resources” means all naturally occurring minerals, but does not include peat, petroleum, natural gas, bitumen, oil shales, limestone, marble, clay, gypsum, earth, ash, marl, gravel, sand or any element that forms part of the agricultural surface of the land. “mining, oil or gas industry activities”« activités minières, pétrolières ou gazières » “mining, oil or gas industry activities” includes the exploration, extraction, production, conservation, processing, transportation and other significant actions relating to mineral resources, oil or gas. “oil”« pétrole » “oil” has the same meaning as in section 2 of the Canada Oil and Gas Operations Act. “operator”« exploitant » “operator” means the party in a joint venture who is designated as the operator of an extractive project by agreement between or among the parties or who actually conducts the operations of the extractive project. “payment”« paiement » “payment” means a payment that is given for the purposes of furthering the mining, oil or gas industry and that is not negligible and, without limiting the generality of the foregoing, includes (a) taxes, including but not limited to, corporate taxes, remittance taxes, mining taxes, value-added taxes, import taxes and export taxes; (b) royalties; (c) dividends and profit shares; (d) licence fees, rental fees, entry fees and other consideration paid for licences or concessions; (e) production entitlements and in-kind payment volumes; (f) bonuses, including but not limited to, signature, discovery and production bonuses; (g) provision of infrastructure and other in-kind payments; (h) social payments and transfers; (i) fees paid for services rendered in the context of a contractual or employment agreement, including consulting fees; and (j) other prescribed material benefits that are not negligible. “prescribed”Version anglaise seulement “prescribed” means prescribed by regulations made under section 7. “subsidiary”« filiale » “subsidiary”, in the context of a particular extractive project, means a corporation in which a Canadian corporation (a) holds, directly or indirectly, a voting interest greater than 50%; (b) holds a voting interest of 50% and is the operator of the extractive project; or (c) holds a voting interest of less than 50%, is the largest single holder of voting shares and is the operator of the extractive project. ANNUAL TRANSPARENCY REPORTS Submission of annual transparency reports 4. (1) Every extractive corporation must submit an annual transparency report, along with proof that the report was independently audited in accordance with subsection (7), to the Minister of Foreign Affairs and the Minister of Natural Resources on or before the 180th day after the end of its fiscal year. Available to public (2) Every extractive corporation must post the annual transparency report submitted under subsection (1) on its website on or before the 180th day after the end of its fiscal year and leave it up until the posting of the annual transparency report for the following fiscal year. Information disclosed (3) The annual transparency report submitted under subsection (1) must disclose all payments provided by an extractive corporation or its subsidiaries to a foreign government for the purposes of furthering mining, oil or gas industry activities, and must include the following information: (a) a statement of total payments made by the extractive corporation or its subsidiaries to foreign governments, categorized by foreign government to which the payments were made; (b) subject to subsection (4), a statement of total payments made by the extractive corporation or its subsidiaries to foreign governments, categorized by extractive proj-ect; and (c) subject to subsection (4), a statement of total payments made by the extractive corporation or its subsidiaries to foreign governments related to each extractive proj-ect, categorized as follows: (i) taxes, including but not limited to, corporate taxes, remittance taxes, mining taxes, value-added taxes, import taxes and export taxes, (ii) royalties, (iii) dividends and profit shares, (iv) licence fees, rental fees, entry fees and other consideration paid for licences or concessions, (v) production entitlements and in-kind payment volumes, (vi) bonuses, including but not limited to signature, discovery and production bonuses, (vii) provision of infrastructure and other in-kind payments, (viii) social payments and transfers, (ix) fees paid for services rendered, in the context of a contractual or employment agreement, including consulting fees, and (x) any other payments not included under subparagraphs (i) to (ix). Specialized disclosure (4) If any payments made by the extractive corporation or its subsidiaries to foreign governments are not attributed to individual extractive projects, the report referred to in subsection (3) must include a statement of those payments and their recipients, indicating the payments made in each of the categories referred to in subparagraphs (3)(c)(i) to (x). Investigation by Minister (5) If the Minister of Natural Resources has reasonable grounds to believe that any payments disclosed in accordance with subsection (4) can in fact be attributed to individual extractive projects, the Minister may conduct an investigation into the circumstances relating to the payments. Contextual details (6) The information disclosed in respect of the categories referred to in paragraph (3)(c) must include (a) the currency used to make the payment; (b) the financial period in which the payment was made; (c) the business segment of the extractive corporation or its subsidiary that made the payment; (d) the foreign government that received the payment, and the country in which the foreign government is located; (e) the extractive project to which the payment relates; and (f) any other prescribed information relating to the context of the payment or extractive project. Independent audit (7) Before an annual transparency report is submitted under subsection (1), it must be audited by a qualified independent auditor, unless the information contained in the report has already been audited by a qualified independent auditor in accordance with international auditing standards. Annual compilation 5. The Minister of Natural Resources must post an annual compilation of the information received in accordance with subsections 4(3) and (4), and organized in accordance with that subsection, on the departmental website. The compilation must be in the form of a publicly accessible and searchable database. OFFENCES AND PUNISHMENTS Strict liability offence — summary conviction 6. (1) Every extractive corporation that contravenes section 4 is guilty of an offence and is liable on summary conviction to a fine of not less than $20,000 and not more than $5,000,000. Venue (2) Any complaint or information in respect of an offence under this Act may be heard, tried or determined by any Canadian court with jurisdiction over the extractive corporation. REGULATIONS Regulations 7. The Governor in Council may make regulations (a) amending, in order to be consistent with the EITI Rules and other internationally accepted revenue disclosure standards, the information required to be submitted under subsections 4(3), (4) and (6) to add, modify or remove any information that must be submitted; (b) amending, in order to be consistent with the principles of the EITI, the definition of the term “payment” to include commonly recognized revenue streams for the commercial development of minerals, oil or gas; and (c) generally, for carrying into effect the purposes and provisions of this Act. COMING INTO FORCE Coming into force 8. This Act comes into force 30 days after the day on which it receives royal assent. Published under authority of the Speaker of the House of Commons