This bulletin will summarily review Bill 55, An Act respecting transparency measures in the mining, oil and gas industries ("Bill 55") introduced at Québec's National Assembly by the ministre délégué aux Mines (the "Minister for Mines"), just a few days before adjournment of the National Assembly's work to September 15, 2015. This bulletin also outlines a few other developments in connection with the Mining Act (Québec) (the "Mining Act").

Bill 55

Announced in the last budget of the Province of Québec (see our bulletin dated April 7, 2015, the “April 2015 Bulletin”), Bill 55 specifies that it aims to discourage and detect corruption and to foster social acceptability of natural resource exploration and development projects.

In order to attain this objective, Bill 55, which, to a certain extent, echoes the Canada Extractive Sector Transparency Measures Act (in force since June 1, 2015), proposes a disclosure regime applicable to any legal person, corporation or other organization (any such legal person, corporation or other organization that is covered by the following requirements, a "Subject Entity") (i) that engages in exploration for or development of mineral substances or of hydrocarbons or, if applicable, in other activities relating to mineral substances or hydrocarbon, or other requirements, determined by a regulation of the Government of Québec (the "Government") (ii) that holds a permit, a right, a licence, a lease or another authorization for such exploration or development activities, or that controls such an entity, directly or indirectly and in any manner whatsoever (subject to what may be established by Government regulation) and (iii) that complies with one of the following:

  • it is listed on a stock exchange in Canada and has its head office in Québec, or
  • it has an establishment in Québec, exercises activities or has assets in Québec and, based on its consolidated financial statements, meets at least two of the following conditions for at least one of its two most recent fiscal years: it has at least $20 million in assets, it has generated at least $40 million in revenue, it employs an average of at least 250 persons.

Bill 55 proposes that the Government be granted the regulatory power to add to such requirements.

Thus, pursuant to Bill 55, a Subject Entity will have to send to Québec's Autorité des marchés financiers (the "Authority") an annual statement (each an "Annual Statement") at latest the 150th day following the end of each of its fiscal years. A Subject Entity must state therein all payments (monetary or in kind) that fall within certain categories described below in relation to exploration or development of mineral substances or hydrocarbons (the "Payments" and each a "Payment"), if the total value of Payments made to a single payee during the fiscal year covered by an Annual Statement is equal to or greater than $100,000.

The form of the Annual Statement will be prescribed by Government regulation, including the manner of presenting or breaking down the Payments (for instance, by project), as well as the procedure for sending such statements. Bill 55 also provides that each Annual Statement shall have to be accompanied by a certificate of a director or officer of the Subject Entity, or of an outside independent auditor, attesting to the truth and accuracy of the information in an Annual Statement and to its being complete.

The word "payee" in Bill 55 refers to: (i) a government and a municipality, (ii) a body created by at least two governments, (iii) the Kativik Regional Government, a Native nation represented by all the band councils, or the councils of the Northern villages, of the communities forming the Native nation, the Makivik Corporation, the Cree Nation Government, a Native community represented by its band council, a group of communities so represented or, in the absence of such councils, any other Native group, (iv) any board, commission, trust or corporation or other body that exercises, or is established to exercise, public powers or duties of Government for a payee described above, and (v) any other payee designated as such by a regulation of the Government (those covered by items (i) to (v) above, the "Payees" and each a "Payee"; and the Payees covered by item (iii) above, those covered by item (ii) above, when established by at least two Native group covered by item (iii), and those covered by item (iv) above, when in reference to Payees covered by items (ii) et (iii), the "Native Payees" and each a "Native Payee").

The concerned categories of Payments are described in Bill 55 as being taxes and income taxes (other than consumption and personal income taxes), royalties, fees (including those for rental, for entry, of a regulatory nature and any other consideration for licences, permits or concessions), production entitlements, dividends (other than those paid as an ordinary shareholder of a Subject Entity), bonuses (including signing, discovery of a deposit and production bonuses) and contributions for the construction or improvement of an infrastructure, the Government having the regulatory power to establish other Payment categories.

According to Bill 55 a Payment made to an employee or a public office holder of a Payee and a Payment that is due to a Payee and received on the Payee's behalf by another body that is not a Payee shall be deemed made to the Payee to whom the Payment is due, while a Payment made on behalf of a Subject Entity will be deemed to have been made by such Subject Entity and a Payment made by a legal person, corporation or other organization that is not a Subject Entity, but that is controlled by a Subject Entity, is deemed to be made by such controlling entity.

For the value of a Payment made in kind, Bill 55 proposes that it correspond to the cost of the property or services provided or, if such cost cannot be determined, the fair market value of the property or services.

Bill 55 would further impose the following obligations on a Subject Entity: it must make an annual Statement public in the manner determined by the Government for a 5 year period from the date of its transmittal (a "Transmittal Date") and it must keep records of all Payments made in a fiscal year for a 7 year period following the applicable Transmittal Date.

Bill 55 proposes that a wholly-owned subsidiary Subject Entity of a another Subject Entity will be deemed to have filed its Annual Statement if the parent Subject Entity has transmitted its Annual Statement to the Authority and certain other prescribed conditions have been met.

Also pursuant to Bill 55, the Government may determine by regulation that the requirements of another competent authority are an acceptable substitute because they achieve the same purposes as those of Bill 55 and the conditions allowing for such a substitution, in which case a statement produced in compliance with such other authority's requirements may be substituted for an Annual Statement at the conditions set by Government regulation.

Furthermore, the minister who will be responsible for the application of Bill 55 (the "Minister") will be allowed to enter into an agreement with a government of another competent authority or with one of its bodies, for purposes of implementing Bill 55 or concerning the requirements pertaining to the statements required by such other government or body, such an agreement to contain, amongst others, provisions for the sharing between the Minister or the Authority and such other government or body, of information needed for purposes of said requirements.

Source: Fasken Martineau - see full bulletin