M&A Considerations For Resource Issuers: Canada's Extractive Sector Transparency Measures Act

Canada's Extractive Sector Transparency Measures Act (ESTMA, or the Act) came into force on June 1, 2015. The Act imposes disclosure obligations on certain Canadian businesses engaged in the commercial development of oil, gas or minerals with respect to payments made to domestic and foreign governmental bodies. As we previously noted, Canadian businesses subject to the Act are currently required to collect information on the payments they make, and the first ESTMA-compliant reports will be due to Natural Resources Canada by May 30, 2017 (for organizations with a December 31 financial year end).

Resource companies currently negotiating acquisitions as purchasers should be mindful of this legislation and ensure that appropriate provisions are included in the purchase agreement so they are able to comply with the Act and so they do not inherit any reporting obligations they cannot satisfy.