Moving from developing a roadmap to implementing the first steps to disclose the beneficial owners of oil, gas and mining companies, the International Secretariat provides the following resources:
The identity of the real owners – the ‘beneficial owners’ – of the companies that have obtained rights to extract oil, gas and minerals is often unknown, hidden by a chain of unaccountable corporate entities. This problem also affects other sectors and often helps to feed corruption and tax evasion. People who live in resource-rich countries are at particular risk of losing out as extractive assets are too often misallocated for corrupt reasons.
By 2020, all EITI countries will publish the identity of oil, gas and mining companies that bid for, operate or invest in extractive projects in their country.
It also requires public officials – also known as Politically Exposed Persons (PEPs) to be transparent about their ownership in oil, gas and mining companies.
This information will be publicly available and will be published in EITI Reports and/or public registries. EITI requirements have sparked reform in 20 countries now working on establishing public registers.
Once published, law enforcers, civil society and others have a responsibility to scrutinize the information, and take action to hold to account those who misuse anonymous companies.
Hidden ownership also poses problems for honest companies because they don’t know who they are doing business with. Publishing the real owners will help ensure that there is a level playing field for all companies and allow them to know who they are doing business with.
Requirement 2.5 of the EITI Standard (2016) specifies what countries will do to uncover beneficial owners:
By 2020, all implementing countries have to ensure that all oil, gas and mining companies that bid for, operate or invest in extractive projects in their countries publish the names of their real owners.
This should include the identity of the owner, i.e. the name, nationality and country of residence. Companies are also encouraged to publish further details such as the date of birth, national identity number, residential address etc.
Any politically exposed persons holding ownership in oil, gas and mining projects must be publicly identified.
The EITI recommends that beneficial ownership information is made available through public registers. At a minimum, the information must be published in the country’s EITI Report.
The EITI Standard defines beneficial ownership as follows:
2.5 f) Definition of beneficial ownership:
i. A beneficial owner in respect of a company means the natural person(s) who directly or indirectly ultimately owns or controls the corporate entity.
ii. The multi-stakeholder group should agree an appropriate definition of the term beneficial owner. The definition should be aligned with (f)(i) above and take international norms and relevant national laws into account, and should include ownership threshold(s). The definition should also specify reporting obligations for politically exposed persons.
iii. Publicly listed companies, including wholly-owned subsidiaries, are required to disclose the name of the stock exchange and include a link to the stock exchange filings where they are listed.
iv. In the case of joint ventures, each entity within the venture should disclose its beneficial owner(s), unless it is publicly listed or is a wholly-owned subsidiary of a publicly listed company. Each entity is responsible for the accuracy of the information provided.
Since 2013, the fight against secret company ownership has gained great momentum. The G8 and G20 have made transparency in beneficial ownership a key priority. The European Union has required member states to establish registers. Several countries have passed national legislation and are working towards public registers. Yet, to date, there is relatively little beneficial ownership information out in the open.
The EITI is one of few organisations that has delivered practical results through annual collection and publication of beneficial ownership information in EITI Reports, and through the beneficial ownership pilot conducted in 11 countries from 2013-2015.
By early February 2017, fourty-five EITI countries have published beneficial ownership roadmaps which outline how they are going to reach publish beneficial owners.
The progress countries have been making on the disclosure of beneficial ownership can be found on their EITI pages:
Tools for countries implementing requirement 2.5 of the Standard:
A model beneficial ownership declaration form (excel file, see attachment below)Standard Terms of Reference (ToR) for Independent Administrators (IA) including instructions for multi-stakeholder groups who wish to task the IA with collecting and collating beneficial ownership data (word doc, also attached below. More languages to follow soon.)
Guidance note 22 – Requirement 2.5
Guidance on developing a beneficial ownership roadmap consists of:
Guidance note 22 (see text below and PDF in English. More languages can be found below Powerpoint presentation on developing a roadmap on beneficial ownership (see more languages attached below)You can find further resources under point 5. Further reading
There are clear benefits for companies operating in countries with beneficial ownership registers:
Reduces risk in business relationsCreates a level playing fieldImproves investment climatePrevents corruption and illicit flowsBuilds trust.
Find out more in this factsheet.
A further resource for why beneficial ownership transparency is positive for business is www.openownership.com
Transparency about company and government payments is important for accountability, but tells citizens little about who owns extractive companies and ultimately benefits from the companies’ activities. In many cases, the identity of the real owners – the ‘beneficial owners’ – of the companies that have acquired rights to extract oil, gas and minerals is unknown, often hidden behind a chain of corporate entities. This opacity can contribute to corruption, money laundering and tax evasion in the extractive sector.
An eight-page fact sheet on how EITI countries are moving towards disclosing the real owners.
An infographic showing the five steps for countries towards a beneficial ownership register for companies active in the extractive industries by 2020.