The new 2016 Extractive Industries Transparency Initiative Standard approved by the international board now makes it mandatory for the identities of those who own and profit from extractive activities to be disclosed.
The EITI Standard is the authoritative global transparency standard for improving governance of natural resources. It shows how member countries can implement the EITI principles in their domains.
“All countries must ensure that the companies that bid for, operate or invest in extractive projects declare who their beneficial owners are,” the EITI said in its 2016 revised standards.
The requirement will take effect January 1, 2020, giving countries some time to undertake the necessary preparations.”
Beneficial ownership describes the ‘natural’ person(s) who, directly or indirectly, ultimately own(s) or control(s) a corporate entity, a license or other property.
Information provided under the new EITI standard would enable countries to expose corruption and nepotism in the assets acquisition process.
Apart from the demand for companies to voluntarily disclose information on their ownership structure, including any politically exposed persons, the standard, going forward, also establishes a mechanism that would enable it capture ownership of divested wells, licence-holders, leaseholders and companies bidding for extractive industry contracts.
Validation, which is EITI’s quality assurance mechanism, has also been refined in the 2016 document, particularly the EITI Standard, which would check whether countries are adhering to the EITI requirements.
Although EITI said the bar for achieving compliance has not changed, the group said the assessment would, to a greater extent, take into account the diversity in implementing country membership, recognition of efforts to proceed beyond the minimum requirements and provide incentives towards continuous improvements in implementation.
Other changes to the EITI Standard include a greater focus on ensuring that recommendations from EITI Reports were considered and followed up by governments and multi-stakeholder groups so that necessary reforms in sector management take place.
The 2016 EITI Standard also include other minor revisions aimed at clarifying ambiguities and addressing inconsistencies.