European Commission Proposes Disclosure Requirements for Payments to Governments for the Development of Natural Resources: Summary Side-by-Side Comparison of European Union and United States ProposalsSullivan & Cromwell LLP - November 17, 2011
On October 25, 2011, the European Commission published two proposals to amend the European Union (EU) Transparency Directive (2004/109/EC) and to implement a new directive governing preparation of financial statements. Together, the EU proposals contain new requirements for the disclosure of payments to governments by certain companies engaged in natural resource extraction or logging and are based on the standards set forth in the Extractive Industry Transparency Initiative (EITI). The European Parliament and the Council of Ministers will now consider the proposals. As yet, no schedule or deadline for consideration or implementation by means of national legislation has been published.
The European Commission’s proposals come after similar proposals in the United States. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 directed the United States Securities and Exchange Commission to adopt rules requiring disclosure of payments to governments by certain companies engaged in the commercial development of oil, natural gas or minerals. The proposed U.S. rules, which are also informed by the EITI standards, were published for comment on December 15, 2010 and are scheduled to be adopted by the end of 2011.
The summary in the attached provides a side-by-side comparison of the key elements of the proposals by the European Commission and the United States Securities and Exchange Commission.