Publish What You Pay (PWYP) calls for an amendment to the rules of national stock market listing authorities to require all listed oil, gas and mining companies to disclose a disaggregated breakdown of payments (taxes, fees, royalties and other transactions) made to governments for all countries of operation. An example of this is Dodd-Frank 1504 in the US, which obliges all extractive companies listed in stock exchanges in the country to publish their payments made to governments.
Companies wishing to raise capital or have their stock traded on national stock markets need to disclose information about their activities according to the rules set by that specific stock market regulator – the New York Stock Exchange rules, for example, are set by the Securities Exchange Commission (SEC).
Dodd-Frank 1504, adopted in June 2010, obliges all extractive companies listed in the US (for instance on the New York Stock Exchange) to publish the payments they make to all the governments in the countries where they operate. The rules governing section 1504 of the Dodd-Frank Act were published in August 2012. In October 2012 the American Petroleum Institute, a lobby group representing companies such as BP, Exxon, Chevron and Shell, filed a lawsuit against the US Securities and Exchange Commission (SEC) in a bid to overturn Dodd-Frank 1504
In April 2013, the US Court of Appeals dismissed API’s lawsuit against Dodd-Frank 1504 on jurisdictional grounds and the case moved to the US District Court. In July 2013, the US District Court decided to vacate the rule and send it back to the SEC for further proceedings. Publish What You Pay strongly disagrees with this decision. Read PWYP’s response here.
For a Q + A on Dodd-Frank 1504, please click here
To find out more about PWYP USA’s campaign on stock listings, visit the PWYP USA page
PWYP Canada has been advocating for mandatory disclosure of payments that extractive companies make to host governments. Approximately 60% of the world’s mining companies and over a third of the world’s oil and gas companies are listed in Canada, therefore implementing mandatory disclosure there would have a strong impact.
PWYP-Canada launched the Resource Revenue Transparency Working Group, with the Revenue Watch Institute and mining industry associations in 2012. This group recently completed the negotiation of draft recommendations for mandatory disclosure standards for the Canadian mining industry. In addition, Prior to the G8 Summit in Lough Erne, Prime Minister Stephen Harper announced that Canada will implement mandatory reporting requirements. You can read PWYP Canada’s press release in response to this here
To find out more about PWYP Canada’s campaign on stock listings, visit the PWYP Canada page
Publish What You Pay Australia has been pushing the Australian government to adopt mandatory disclosure rules. There are 1,041 extractive companies, representing 5% of global market value listed on the Australia Stock Exchange, making the campaign for mandatory disclosure rules of paramount importance. In 2012 PWYP Australia sent submissions to the ASX recommending that they require extractive company issuers to report on a project by project basis. Earlier this year PWYP Australia launched a briefing, Australia: an unlevel playing field, at Citigroup’s Sydney headquarters the current level of disclosure by the extractive companies listed on the ASX 200
PWYP continues to push for mandatory disclosure rules in the Australia and has made two recent lobby trips to Canberra to discuss the issue further with decision makers.
To find out more about PWYP Australia’s activities, visit their page
The introduction of disclosure rules requiring listed companies to report payments, when applied to major stock exchanges around the world (including London, New York, Tokyo, Toronto and Berlin), would capture most of the major international extractive companies. Those companies would then be obliged to comply with specific stock market regulations where they are listed and report payments as required.
With the introduction of a stock market listing rule that would require companies to report payments to governments on a country-by-country basis and by payment type, citizens can gain in two ways; firstly by accessing the information they need to hold their governments to account for the use of national resources; and, secondly, citizens can judge whether the company payments are appropriate for the resources gained. These are the main drivers for PWYP’s interest in greater transparency of company finances.
In addition, incorporating revenue transparency requirements into stock market disclosure rules has advantages from a business perspective. Stock market listing regulations would supersede confidentiality clauses in contracts which currently hamper companies that would otherwise be able to disclose their payments. Secondly, stock market regulations would level the playing field because of the breadth of companies covered, and as such, those companies that wish to disclose because it is in their best interest, do not face a potential competitive disadvantage.
It is important to note however that stock market disclosure rules would not apply to companies that are not registered on any stock market, (such as Saudi Arabia’s Aramco). These state-owned extractive companies usually provide a significant amount of revenues to governments from resource extraction, and therefore complementary measures such as the EITI are required to ensure that such companies also publish what they pay.