Out-Law News | 25 Aug 2014 | 11:28 am | 1 min. read
The new reporting requirements, which are set out in the EU's Accounting Directive, will come into force for UK-registered companies on 1 January 2015, Jo Swinson said. Companies will have a maximum of 11 months after the end of the relevant financial year to report on any extractive payments made after this date to Companies House. Penalties for non-reporting will be based on existing offences in the Companies Act.
"Oil, gas and mining can, if well managed, deliver precious economic benefits to the populations of developing countries," she said. "Too often though, the assets from resource-rich countries are not benefitting local people or the local economy."
"The UK is determined to lead by example which is why we have introduced reporting requirements on UK-based extractives companies early. These changes will result in greater transparency, helping build a stronger economy and ensuring people around the world have the information they need to hold their governments to account," she said.
The Accounting and Transparency Directives come into force in July 2015. Once in force, they will require large extractive and logging companies to report the payments they make to governments on a country-by-country basis, or on a project basis where payments have been attributed to specific projects. The reporting requirements cover production entitlements; taxes on income, production or profits; royalties and dividends; signature, discovery and production bonuses; and licence, rental and entry fees and related payments or concessions.
The directives were drafted in response to international developments, in particular the inclusion of a requirement to report payments to governments contained in the Dodd Frank Act in the US. However, this provision is not yet in force as it requires the publication of final implementing rules by the US Securities Exchange Commission (SEC). Although these rules were adopted in September 2012, a US court overturned these for being potentially anti-competitive.
The UK regulations, which were published for consultation earlier this year, are expected to apply to around 250 companies. Companies will have to disclose all payments above the reporting threshold, which is €100,000. UK-registered subsidiaries of parent companies registered in other EU countries will only need to file reports as part of consolidated accounts in the parent member state.