New transparency and accounting regulations for oil, gas and logging companies
On 25 October 2011 the European Commission (EC) adopted a legislative proposal requiring the disclosure of payments to governments on a country and project basis by listed and large non-listed companies with activities in the extractive industry (oil, gas and mining) and loggers of primary forests (the so-called country by country reporting – CBCR). This puts the EU on a level playing field with the US which also adopted disclosure requirements in July 2010 (Section 1504 of the Dodd-Frank Act).
This disclosure requirement has been incorporated in the proposals to revise the Accounting Directives (78/660/EEC and 83/349/EEC) and the Transparency Directive (2004/109/EC). The existing Accounting Directive regulates the information provided in the financial statements of all limited liability companies which are registered in the European Economic Area (EEA). The same disclosure requirement has been incorporated in the proposal to revise the Transparency Directive in order to include all companies which are listed on EU regulated markets even if they are not registered in the EEA and are incorporated in a third country.
Following negotiations, the Commission announced on 9 April a revision to the Transparency Directive. The revision will establish rules ensuring that these companies disclose payments to governments (e.g. taxes on profits, royalties, and licence fees) on a country and project basis. Reporting would also be carried out on a project basis, where payments have been attributed to specific projects. The text requires the Commission to review the possibility of extending the disclosure requirements to other sectors.
For further information, please click here.