Revenue Watch Co-Hosts Roundtable on Canadian Securities Regulation in the Extractive Sector

By RWI Economic Analyst Andrew Bauer

In response to the historic transparency measures passed in the U.S. Dodd-Frank financial reforms, Canadian members of government, industry, civil society and academia gathered on January 18 to explore the new rules for companies listed on U.S. stock exchanges and their implications for rule-making in Canada. Organized by Revenue Watch, Publish What You Pay Canada and the human rights program at the Faculty of Law, University of Toronto, the roundtable was the first step in what is expected to be an ongoing discussion among Canadian stakeholders about transparency for extractive companies listed on Canadian stock exchanges.

The participants discussed ways to enable more comprehensive disclosures of payments to foreign governments and possible measures to determine the source of conflict minerals in manufactured products.

There was broad agreement that Canadian disclosure requirements can be improved. At present, Canada’s unique regulatory system, consisting of 13 provincial and territorial regulators—some of which may soon be replaced by a national securities regulator—and the lack of final SEC rules governing the Dodd-Frank Act provide obstacles to short-term implementation. The SEC rules are expected to be released in April.

There was less consensus regarding what action Canada should take concerning conflict minerals—extractives that are used to support violence or war in resource-rich countries like the Democratic Republic of the Congo (DRC). Provision 1502 of the Dodd-Frank Act mandates a new reporting requirement for companies that manufacture products that utilize conflict minerals. While all roundtable participants agreed that the tragedy in the DRC must be addressed by advanced economies, no particular Canadian response was determined.

Following this initial event, Canadian stakeholders and officials will continue a dialogue on how to improve revenue transparency in Canada and discourage the use of conflict minerals. With roughly 80% of global mining transactions over the last five years occurring on Canada’s exchanges and over half the world’s mining companies listed there, Canadian support is key to improving natural resource governance globally.

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