
Publication
Federal government introduces further amendments to Canada’s Competition Act
On September 21, the Minister of Finance tabled Bill C-56, which includes, among other things, proposed amendments to the Competition Act (the Act)
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Canada | Publication | January 19, 2021
The Alberta Energy Regulator (AER) has announced all oil and gas licensees will have to provide a financial summary in addition to the existing requirement to provide financial statements in order to maintain eligibility to hold oil and gas licenses. This change is to be implemented through a proposed new edition of AER Directive 067: Eligibility Requirements for Acquiring and Holding Energy Licenses and Approvals. The financial summary will be in addition to the compliance history about the licensee, its affiliates and directors and officers already required by Directive 067. It will be used by the AER to assess a licensee’s eligibility to hold oil and gas licenses and meet regulatory and liability obligations and to administer the AER’s liability management programs.
The proposed financial summary requires information about a licensee’s ability to continue as a going concern, breaches of debt covenants and agreements, significant financing arrangements and material acquisitions and divestitures. The financial summary must be certified as complete and accurate by a director or officer.
This additional requirement is part of the ongoing rollout by the AER of its new liability management framework for the oil and gas industry designed to ensure that operators meet their asset retirement obligations and to reduce the number of inactive oil and gas wells that require permanent closure. Other recent developments include legislative amendments, plans to create a licensee capability assessment and expansion of the power of the Orphan Well Association.
The AER’s philosophy is that acquiring and holding oil and gas licenses is a privilege and not a right. The proposed new requirements are intended to allow for increased scrutiny to ensure that this privilege is only granted to responsible operators. Licensees must not, in the AER’s opinion, pose an unreasonable risk that they will default on their regulatory and liability obligations at any time during an energy project’s life cycle.
If the AER believes the risks are unreasonable, it can declare an operator ineligible to hold a license, limit the types of license they can hold or impose restrictive terms and conditions in their licenses. Under other requirements, the AER can demand financial security from a licensee or deny the transfer of a license. The financial security requirements and other features of the AER’s liability management program will not change under the proposed new edition of Directive 067.
Two financial items will be required annually from a licensee within 120 days of the licensee’s fiscal year end: audited financial statements and the financial summary. This will apply to public and private corporations.
If audited financial statements are not available, those prepared by management may be acceptable. For new companies with no financial history, details of their financing must be provided.
The AER has also proposed that if a licensee is a subsidiary of another corporation, the financial statements of the parent corporation must also be provided together with the parent corporation’s financial summary. This will be a new requirement. However, it is unclear if it will apply to all corporate shareholders or only those which are able to exert control over a licensee. Under the existing Directive 067 only information on shareholders who alone or in combination with others hold or control more than 20% of the outstanding voting securities of a licensee must be provided to the AER. It is not clear if this 20% rule will apply to the provision of the parent corporation’s financial information.
The financial summary form will be a new requirement. Licensees will have to disclose information from their balance sheet, the amount and source of their revenues, their operating and other expenses and their cash flows from operations, investments and financings.
The proposed new edition of Directive 067 also further enunciates the factors the AER may consider in assessing whether a licensee poses an unreasonable risk in the AER’s opinion, namely:
The AER is accepting feedback on the draft Directive 067 until February 14, 2021.
Publication
On September 21, the Minister of Finance tabled Bill C-56, which includes, among other things, proposed amendments to the Competition Act (the Act)
Publication
The Department of Finance (Canada) has released draft legislative proposals to enact the clean technology investment tax credit (the Clean Tech ITC) that was first announced in the 2022 Fall Economic Statement (and subsequently included in the 2023 federal budget).
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