UK oil and gas companies are gearing up for a new era of transparency which will shed light on links between operators and governments around the world, law firm Pinsent Masons says.
An overhaul of financial reporting driven by a new European Union directive is due to come into force on New Year’s Day, months ahead of other EU member states.
Directors face criminal convictions and unlimited fines if details of any payments made to governments are not disclosed to Companies House.
The directive, which also applies to the mining and forestry industries, is part of a pan-European drive for greater transparency of business practices.
Martin Ewan, Aberdeen-based oil and gas partner at Pinsent Masons, said: “Transparency is at the heart of UK business and this agenda has been driven hard by our current government. It’s no surprise, therefore, that the UK has opted to bring these rules into force early.
“Will these rules be a genuine aid to transparency of business or just another box-ticking exercise? The fact that the regulation is backed by the most severe of penalties would suggest the new rules will have teeth.
“Preparing these reports will be burdensome for many businesses with numerous international operations. Failure to comply with these new laws could be very damaging.”
He added: “Operators haven’t been given much time between the publication of the guidance and the deadline for compliance.
“This is a particular issue for large scale, multinational developers with numerous administrative centres. Tracking and documenting of all payments can be an unwieldy task.”
