On 9 April 2013, the European Union Member States, Parliament and Commission agreed to adopt the Accounting and Transparency Directives. The Directives require oil, gas, mining and logging companies to annually disclose the payments they make to governments for access to natural resources, in all countries they operate in.
The EU Directives require companies to disclose all payments of €100,000 and above that arise from each individual resource project they operate, thereby providing a high level of disaggregation.
The Directives bring the EU in to line with the US Securities and Exchange Commission’s implementing rules for the US Dodd-Frank Act (Section 1504), which also require oil, gas and mining companies to disclose their payments to governments on a country-by-country and project-by-project basis.
Together, the U.S. and EU rules cover around 70% of the market capitalization of oil, gas and mining firms on the world’s most significant stock exchanges.
The EU Directives apply to:
- All companies listed on EU-regulated stock markets that are active in the extractive industry or logging of primary forests.
- Large, unlisted extractive and forestry companies registered in the EU.
- EU-listed or large unlisted parent companies in any sector with subsidiaries active in the extractive or logging industries.
The types of payments to be disclosed are:
- Taxes levied on the income, production or profits of companies.
- Fees including licence fees, rental fees and entry fees.
- Signature, discovery and production bonuses.
- Payments for infrastructure improvements.
The Directives will go to plenary in the European Parliament for final approval, expected in June of this year.
The EU and U.S. rules are intended to help lift the ‘resource curse’ by providing citizens with information needed to track extractive industry revenues and ensure they are used to fund development. Investors worth over $ 1 trillion have expressed strong support for mandatory payment disclosure requirements, as greater transparency enhances their ability to assess risk in what are often high-risk operating environments.
For more information please contact Brendan O’Donnell, Oil Campaign Team Leader, [email protected] / +44 7912 517 128