Requirements for EITI implementing countries

How to read this chapter

This chapter sets out the requirements that must be adhered to by countries implementing the EITI. There are two groups of implementing countries: EITI Candidate and EITI Compliant countries. EITI candidature is a temporary state which is intended to lead, in a timely fashion, to compliance with the EITI Standard. In order to become an EITI Candidate, countries must, through the process outlined below, demonstrate that they have met Requirement 1. In order to become EITI Compliant, implementing countries must demonstrate through Validation that they have met EITI Requirements 1-7 set out in this chapter. The requirements are summarised in box 1.

The EITI Requirements are minimum requirements and implementing countries are encouraged to go beyond them where stakeholders agree that this is appropriate. Stakeholders are encouraged to consult additional guidance materials on how to best ensure that the requirements are met, available via www.eiti.org.

Box 1 - EITI Requirements

EITI Sign-Up

A country intending to implement the EITI is required to undertake a number of steps before applying to become an EITI Candidate (see box 2).

Box 2 - Sign-up steps

When the country has completed these steps and wishes to be recognised as an EITI Candidate, the government should submit an EITI Candidate Application to the EITI Board (see box 3).

Box 3 - Applying to become an EITI candidate

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Requirement 1

The EITI requires effective oversight by the multi-stakeholder group.

1.1 The government is required to issue an unequivocal public statement of its intention to implement the EITI.

The statement must be made by the head of state or government, or an appropriately delegated government representative.

1.2 The government is required to appoint a senior individual to lead the implementation of the EITI.

The appointee should have the confidence of all stakeholders, the authority and freedom to coordinate action on the EITI across relevant ministries and agencies, and be able to mobilize resources for EITI implementation.

1.3 The government is required to commit to work with civil society and companies, and establish a multi-stakeholder group to oversee the implementation of the EITI.

1. The government, companies and civil society must be fully, actively and effectively engaged in the EITI process.
2. The government must ensure that there is an enabling environment for company and civil society participation with regard to relevant laws, regulations, and administrative rules as well as actual practice in implementation of the EITI. The fundamental rights of civil society and company representatives substantively engaged in the EITI, including but not restricted to members of the multi-stakeholder group, must be respected.
3. The government must ensure that there are no obstacles to civil society or company participation in the EITI process.
4. The government must refrain from actions which result in narrowing or restricting public debate in relation to implementation of the EITI.
5. Stakeholders, including but not limited to members of the multi-stakeholder group must:
   1. Be able to speak freely on transparency and natural resource governance issues.
   2. Be substantially engaged in the design, implementation, monitoring and evaluation of the EITI process, and ensure that it contributes to public debate.
   3. Have the right to communicate and cooperate with each other.
   4. Be able to operate freely and express opinions about the EITI without restraint, coercion or reprisal.
      Learn more: Guidance on stakeholder engagement and CSO environment
6. In establishing the multi-stakeholder group, the government must:
7. esure that the invitation to participate in the group is open and transparent;
8. ensure that stakeholders are adequately represented. This does not mean that they need to be equally represented numerically. The multi- stakeholder group must comprise appropriate stakeholders, including but not necessarily limited to: the private sector; civil society, including independent civil society groups and other civil society such as the media and unions; and relevant government entities which can also include parliamentarians. Each stakeholder group must have the right to appoint its own representatives, bearing in mind the desirability of pluralistic and diverse representation. The nomination process must be independent and free from any suggestion of coercion. Civil society groups involved in the EITI as members of the multi-stakeholder group must be operationally, and in policy terms, independent of government and/or companies;
9. ensure that senior government officials are represented on the multi- stakeholder group; and
   Learn more: Guidance on government oversight
10. consider establishing the legal basis of the group.

• The multi-stakeholder group is required to agree clear public Terms of Reference (ToRs) for its work. The ToRs should at a minimum include provisions on:

1. The role, responsibilities and rights of the multi-stakeholder group:

2. Members of the multi-stakeholder group should have the capacity to carry out their duties.
3. The multi-stakeholder group should undertake effective outreach activities with civil society groups and companies, including through communication such as media, website and letters, informing stakeholders of the government’s commitment to implement the EITI, the central role
   of companies and civil society, as well as widely disseminating the public information that results from the EITI process such as the EITI Report.
4. Members of the multi-stakeholder group should liaise with their constituency groups.

   Approval of workplans, EITI Reports and annual activity reports:

5. The multi-stakeholder group is required to approve annual workplans, the appointment of the Independent Administrator, the Terms of Reference for the Independent Administrator, EITI Reports and annual activity reports.
6. The multi-stakeholder group should oversee the EITI reporting process and engage in Validation in accordance with chapter 3.

   Internal governance rules and procedures:

7. The EITI requires an inclusive decision-making process throughout implementation, with each constituency being treated as a partner. Any member of the multi-stakeholder group has the right to table an issue for discussion. The multi-stakeholder group should agree procedures for nominating and changing multi-stakeholder group representatives, decision-making, the duration of the mandate and the frequency of meetings. This should include ensuring that there is a process for changing group members that respects the principles set out in Requirement 1.3 (f).
8. There should be sufficient advance notice of meetings and timely circulation of documents prior to their debate and proposed adoption.
9. The multi-stakeholder group must keep written records of its discussions and decisions.
   Learn more: Guidance on governance and functioning of the MSG

1.4 The multi-stakeholder group is required to maintain a current workplan, fully costed and aligned with the reporting and Validation deadlines established by the EITI Board.

The workplan must:

1. set EITI implementation objectives that are linked to the EITI Principles and reflect national priorities for the extractive industries. Multi-stakeholder
   groups are encouraged to explore innovative approaches to extending EITI implementation to increase the comprehensiveness of EITI reporting and public understanding of revenues and encourage high standards of transparency and accountability in public life, government operations and in business;
2. reflect the results of consultations with key stakeholders, and be endorsed by the multi-stakeholder group;
3. include measurable and time bound activities to achieve the agreed objectives. The scope of EITI implementation should be tailored to contribute to the desired objectives that have been identified during the consultation process.

   1. The workplan must:

   2. assess and outline plans to address any potential capacity constraints in government agencies, companies and civil society that may be an obstacle to effective EITI implementation;
   3. address the scope of EITI reporting, including plans for addressing technical aspects of reporting, such as comprehensiveness and data reliability (Requirements4 and 5); and
      Learn more: Guidance on scoping
   4. identify and outline plans to address any potential legal or regulatory obstacles to EITI implementation, including, if applicable, any plans to incorporate the EITI Requirements within national legislation or regulation.
4. identify domestic and external sources of funding and technical assistance where appropriate in order to ensure timely implementation of the agreed workplan;
5. be made widely available to the public, for example published on the national EITI website and/or other relevant ministry and agency websites, in print media or in places that are easily accessible to the public;
6. be reviewed and updated annually. In reviewing the workplan, the multi- stakeholder group should consider extending the detail and scope of EITI reporting including addressing issues such as revenue management and expenditure (3.7-3.8), transportation payments (4.1.f), discretionary social expenditures (4.1.e), ad-hoc subnational transfers (4.2.e), beneficial ownership (3.11) and contracts (3.12). In accordance with requirement 1.3 (g)(viii), the multi-stakeholder group is required to document its discussion and decisions; and
7. include a timetable for implementation that is aligned with the reporting and Validation deadlines established by the EITI Board (see 1.6, below) and that takes into account administrative requirements such as procurement processes and funding.

1.5 Adapted implementation

Should the multi-stakeholder group conclude that it faces exceptional circumstances that necessitate deviation from the implementation requirements, it must seek prior EITI Board approval for adapted implementation. The request must be endorsed by the multi-stakeholder group and reflected in the workplan. The request should explain the rationale for the adapted implementation.

The EITI Board will only consider allowing adaptations in exceptional circumstances. In considering such requests, the EITI Board will place a priority on the need for comparable treatment between countries and ensuring that the EITI Principles are upheld, including ensuring that the EITI process is sufficiently inclusive, and that the EITI Report is comprehensive, reliable and will contribute to public debate.

1.6 EITI reporting and Validation deadlines

a. EITI reporting deadlines

The EITI requires timely publication of EITI Reports (Requirement 2). If the EITI Report is not published by the required deadline, the country will be suspended. The suspension will be lifted if the EITI Board is satisfied that the outstanding EITI Report is published within six months of the deadline. If the outstanding reports are not published within six months of the deadline, the suspension will remain in force until the EITI Board is satisfied that the country has published an EITI Report that covers data no older than the second to last complete accounting period (requirement 2). If the suspension is in effect for more than one year the EITI Board will delist the country.

b. EITI Validation deadlines

Implementing countries must undertake Validation regularly in order to determine whether implementation is consistent with the EITI Standard (see chapter 3).
The Validation deadlines are illustrated in figure 1.

EITI Candidate countries are required to commence Validation within two and a half years of becoming an EITI Candidate. Validation will determine whether the country is: (1) EITI Compliant, (2) not EITI Compliant, but has made meaningful progress; or (3) not EITI Compliant, and has not made meaningful progress (see below). A country may hold EITI Candidate status for no more than five years from the date that the country was admitted as an EITI Candidate. (The time it takes for the country to undergo Validation is not counted as part of the maximum candidacy period.) After three and a half years, a country will be designated EITI Candidate country (suspended) while undertaking final corrective actions.

EITI Compliance: Where Validation verifies that a country has met all of the requirements the EITI Board will designate that country as EITI Compliant. EITI Compliant countries must maintain adherence to the EITI Principles and Requirements in order to retain Compliant status. EITI Compliant countries are required to undertake Validation every three years.

Where a country has become EITI Compliant, but concerns are raised about whether its implementation of the EITI has subsequently fallen below the required standard, the EITI Board reserves the right to require the country to undergo a new Validation or Secretariat Review. Stakeholders may petition the EITI Board if they consider that Compliant status should be reviewed. This request may be mediated through a stakeholder’s constituency representative(s) on the EITI Board. The EITI Board will review the situation and exercise its discretion as to whether to require an earlier Validation or Secretariat Review. Subject to the findings of that assessment, the EITI Board will determine the country’s status.

The EITI Board reserves the right to designate a previously Compliant country as an EITI Candidate, specifying corrective actions, or to suspend or delist the country. Where a Compliant country has not achieved compliance but made meaningful progress or no meaningful progress in a subsequent Validation, the procedures set out below apply.

Meaningful progress: In order for the Board to conclude that a country has made meaningful progress, Validation or a Secretariat Review must demonstrate that the country has at least made meaningful progress in meeting all seven implementation requirements. In assessing meaningful progress the EITI Board will have regard to:

1. the EITI process, in particular the functioning of the multi-stakeholder group and clear, strong commitment from government; and
2. the status and quality of EITI reporting, including meaningful progress in meeting the requirements for timely reporting as per Requirement 2 and, where applicable, efforts to address recommendations for improving EITI implementation.

Where the first Validation verifies that an EITI Candidate country has made meaningful progress toward achieving EITI Compliant status but has not metall of the requirements, the country will retain its EITI Candidate status for an additional period of twelve months. The EITI Board will set out the remedial actions that the country is required to undertake during this period in order to achieve compliance. Compliance will be assessed through a second Validation. Where the remedial actions necessary for achieving compliance can be assessed quickly and objectively, the EITI Board will consider whether to commission a Secretariat Review as an alternative to a second Validation.

Where a second Validation or Secretariat Review verifies that a country has made meaningful progress but has not achieved compliance, the EITI Board will suspend the country. The EITI Board will set out the remedial actions that the country is required to undertake in order to achieve compliance. The suspension will be lifted if a Secretariat Review verifies that the remedial actions have been completed and the EITI Board is satisfied that the outstanding EITI requirements are met. If the suspension is in effect for more than twelve months, the EITI Board will delist the country. In accordance with requirement 1.7(a) the Board may consider extending the suspension for an additional six months, i.e. a total maximum candidacy period of five years, if there has been continuous progress and the outstanding remedial actions are minor and can be undertaken quickly.

No meaningful progress: Should the Board find that the Validation or Secretariat Review does not demonstrate that that the country has made at least meaningful progress in meeting all seven EITI Requirements, the country will be delisted.

c. Annual activity reports

Multi-stakeholder groups are required to publish annual activity reports (Requirement 7.2). The report of the previous year’s activities must be published by 1 July of the following year. The EITI Board will establish appropriate deadlines for new EITI Candidate countries. If the annual activity report is not published within six months of this deadline, i.e. by 31 December the following year, the country will be suspended until the EITI Board is satisfied that the outstanding activity report has been published.

d. Extensions

An implementing country may apply for an extension if it is unable to meet any of the deadlines specified in sections (a), (b) and (c) above. The EITI Board will apply the following tests in assessing any extension requests:

1. The request must be made in advance of the deadline and be endorsed by the multi-stakeholder group.
2. The multi-stakeholder group must demonstrate that it has been making meaningful progress towards meeting the deadline and has been delayed due to exceptional circumstances. In assessing meaningful progress the EITI Board will have regard to:
   1. the EITI process, in particular the functioning of the multi-stakeholder group and clear, strong commitment from government; and
   2. the status and quality of EITI reporting, including meaningful progress in meeting the requirements for timely reporting as per Requirement 2 and efforts to address recommendations for improving EITI reporting.
3. The exceptional circumstance(s) must be explained in the request from the multi-stakeholder group.
4. No extensions will be granted which would increase the maximum candidacy period.

1.7 Suspension

a. Suspension due to breaches of the EITI Principles and requirements:

Where it is manifestly clear that a significant aspect of the EITI Principles and requirements are not adhered to by an implementing country, the EITI Board will suspend or delist that country. In accordance with Requirement 1.6 above, this includes cases where a country has not met the requirements for timely EITI reporting, publication of annual activity reports and/or achieving compliance with the EITI requirements by the deadlines established by the EITI Board. Where the EITI Board is concerned that adherence to the EITI Principles and requirements is compromised, it may task the International Secretariat with gathering information about the situation and submitting a report to the EITI Board.

Suspension of an implementing country is a temporary mechanism. The EITI Board shall set a time limit of twelve months for the implementing country to address breaches of the EITI Standard. If the matter has not been resolved to the satisfaction of the EITI Board by the agreed deadline, the EITI Board will delist the country. Where suspension follows a second Validation that did not result in compliance, the EITI Board may consider extending the suspension for an additional six months, i.e. until the total maximum candidacy period of five years. The EITI Board will only consider extending the suspension in cases where there has been continuous progress and the outstanding remedial actions are minor and can be quickly undertaken.

b. Suspension due to political instability or conflict:

The EITI Board may decide to suspend countries in cases where political instability or conflict manifestly prevents the country from adhering to a significant aspect of the EITI Principles and requirements. Countries that are experiencing exceptional political instability or conflict may also voluntarily apply to be suspended. In this situation, the government should lodge an application for voluntary suspension with the International Secretariat, which will submit the application to the EITI Board for decision. The government’s application should note the views of the multi-stakeholder group.

Where countries are suspended due to political instability or conflict, the period that the country is suspended will not be counted as part of the maximum candidacy period. The EITI Board will monitor and review the situation on a regular basis. Upon lifting a suspension, the EITI Board will consider setting new reporting and Validation deadlines as appropriate.

c. Lifting the suspension:

The government may apply to have the suspension lifted at any time. The application should document the steps agreed by stakeholders to re-start the EITI implementation and Validation process, and the work plan to achieve compliance. If the EITI Board is satisfied that the reasons for suspension have been addressed, the suspension will be lifted. At all stages in the process, the EITI Board shall ensure its concerns and decisions are clearly communicated to the implementing country.

Suspended countries will be considered an EITI Candidate country (suspended) or an EITI Compliant country (suspended) for the period of suspension, with their suspended status clearly indicated on the EITI website and elsewhere.

1.8 Delisting

Delisting, i.e. revoking a country’s status as an EITI implementing country, will occur if:

1. In accordance with Requirement 1.7 a., an implementing country has been subject to suspension, and the matter has not been resolved to the satisfaction of the EITI Board by the agreed deadline; and
2. In accordance with Requirement 1.6 b., the EITI Board concludes that a country has not made meaningful progress in implementing the EITI.

Where it is manifestly clear that a significant aspect of the EITI Principles and requirements are not adhered to by an implementing country, the EITI Board reserves the right to delist the country. A delisted country may reapply for admission as an EITI Candidate at any time. The EITI Board will apply the agreed procedures with respect to assessing EITI Candidate applications. It will also assess previous experience in EITI implementation, including previous barriers to effective implementation, and the implementation of corrective measures.

1.9 Appeals

Guidance on appeals to the Board

The implementing country concerned may petition the EITI Board to review its decision regarding suspension, delisting or the country designation as EITI Candidate or EITI Compliant following Validation.

In responding to such petitions, the EITI Board will consider the facts of the case, the need to preserve the integrity of the EITI and the principle of consistent treatment between countries.

The EITI Board’s decision is final. The country concerned may, prior to the notice periods under Article 8 of the Articles of Association, appeal a decision of the EITI Board to the next ordinary Members’ Meeting.

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Requirement 2

The EITI requires timely publication of EITI Reports.

2.1 Implementing countries are required to produce their first EITI Report within 18 months of being admitted as an EITI Candidate. Thereafter, implementing countries are expected to produce EITI Reports on an annual basis.

2.2 EITI Reports must cover data no older than the second to last complete accounting period, e.g. an EITI Report published in calendar/financial year 2014 must be based on data no later than calendar/financial year 2012. Multi-stakeholder groups are encouraged to explore opportunities to publish EITI Reports as soon as practically possible. In the event that EITI reporting is significantly delayed, the multi- stakeholder group should take steps to ensure that EITI Reports are issued for the intervening reporting periods so that that every year is subject to reporting.

2.3 The multi-stakeholder group is required to agree the accounting period covered by the EITI Report.

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Requirement 3

The EITI requires EITI Reports that include contextual information about the extractive industries.

3.1 Compiling contextual information

The multi-stakeholder group should agree the procedures and responsibilities for the preparation of the contextual information for the EITI Report. The information should be clearly sourced.

3.2 The EITI Report must describe the legal framework and fiscal regime governing the extractive industries.

1. This information must include a summary description of the fiscal regime, including the level of fiscal devolution, an overview of the relevant laws and regulations, and information on the roles and responsibilities of the relevant government agencies.
2. Where the government is undertaking reforms, the multi-stakeholder group is encouraged to ensure that these are documented in the EITI Report.

3.3 The EITI Report should provide an overview of the extractive industries, including any significant exploration activities.

3.4 The EITI Report must disclose, when available, information about the contribution of the extractive industries to the economy for the fiscal year covered by the EITI Report.

This information is expected to include:

1. Size of the extractive industries in absolute terms and as a percentage of GDP, including an estimate of informal sector activity.
2. Total government revenues generated by the extractive industries (including taxes, royalties, bonuses, fees, and other payments) in absolute terms and as a percentage of total government revenues.
3. Exports from the extractive industries in absolute terms and as a percentage of total exports.
4. Employment in the extractive industries in absolute terms and as a percentage of the total employment.
5. Key regions/areas where production is concentrated.

3.5 The EITI Report must disclose production data for the fiscal year covered by the EITI Report, including:

1. Total production volumes and the value of production by commodity, and, when relevant, by state/region.
   Learn more: Guidance on disclosing volume produced
2. Total export volumes and the value of exports by commodity, and, when relevant, by state/region of origin.
   Learn more: Guidance on disclosing volume exported

3.6 Where state participation in the extractive industries gives rise to material revenue payments, the EITI Report must include:

1. An explanation of the prevailing rules and practices regarding the financial relationship between the government and state owned enterprises (SOEs), e.g. the rules and practices governing transfers of funds between the SOE(s) and the state, retained earnings, reinvestment and third-party financing.
   Learn more: Guidance on state-ownership
2. Disclosures from SOE(s) on their quasi-fiscal expenditures such as payments for social services, public infrastructure, fuel subsidies and national debt servicing. The multi-stakeholder group is required to develop a reporting process with a view to achieving a level of transparency commensurate with other payments and revenue streams, and should include SOE subsidiaries and joint ventures.
   Learn more: Guidance on state-enterprise spending
3. Disclosures from the government and SOE(s) of their level of beneficial ownership in mining, oil and gas companies operating within the country’s ’s oil, gas and mining sector, including those held by SOE subsidiaries and joint ventures, and any changes in the level of ownership during the reporting period. This information should include details regarding the terms attached
   to their equity stake, including their level of responsibility to cover expenses at various phases of the project cycle, e.g. full-paid equity, free equity, carried interest. Where there have been changes in the level of government and SOE(s) ownership during the EITI reporting period, the government and SOE(s) are expected to disclose the terms of the transaction, including details regarding valuation and revenues. Where the government and SOE(s) have provided loans or loan guarantees to mining, oil and gas companies operating within the country, details on these transactions should be disclosed in the EITI Report.
   Learn more: Guidance on state-ownership

3.7 The EITI Report must describe the distribution of revenues from the extractive industries.

1. The EITI Report should indicate which extractive industry revenues, whether cash or in-kind, are recorded in the national budget. Where revenues are not recorded in the national budget, the allocation of these revenues must be explained, with links provided to relevant financial reports as applicable, e.g. sovereign wealth and development funds, sub-national governments, state-owned companies, and other extra-budgetary entities.
2. Multi-stakeholder groups are encouraged to reference national revenue classification systems, and international standards such as the IMF Government Finance Statistics Manual.

3.8 The multi-stakeholder group is encouraged to include further information on revenue management and expenditures in the EITI Report, including:

1. A description of any extractive revenues earmarked for specific programmes or geographic regions. This should include a description of the methods for ensuring accountability and efficiency in their use.
   Learn more: Guidance on earmarked extractive industry revenues
2. A description of the country’s budget and audit processes and links to the publicly available information on budgeting, expenditures and audit reports.
   Learn more: Guidance on budget and audit processes
3. Timely information from the government that will further public understanding and debate around issues of revenue sustainability and resource dependence. This may include the assumptions underpinning forthcoming years in the budget cycle and relating to projected production, commodity prices and revenue forecasts arising from the extractive industries and the proportion of future fiscal revenues expected to come from the extractive sector.

3.9 Register of liceses

1. The term license in this context refers to any license, lease, title, permit, or concession by which the government confers on a company(ies) or individual(s) rights to explore or exploit oil, gas and/or mineral resources.
2. Implementing countries are required to maintain a publicly available register or cadastre system(s) with the following timely and comprehensive information regarding each of the licenses pertaining to companies covered in the EITI Report:
   1. license holder(s);
   2. coordinates of the license area;
   3. date of application, date of award and duration of the license; and
   4. in the case of production licenses, the commodity being produced.

   It is expected that the license register or cadastre includes information about licenses held by all entities, including companies and individuals or groups that are not included in the EITI Report, i.e. where their payments fall below the agreed materiality threshold. Where there are significant legal or practical barriers preventing such comprehensive disclosure, this should be documented and explained in the EITI Report, including an account of government plans for seeking to overcome such barriers and the anticipated timescale for achieving them.

3. Where the information set out in 3.9(b) above is already publicly available, it is sufficient to include a reference or link in the EITI Report. Where such registers or cadastres do not exist or are incomplete, the EITI Report should disclose any gaps in the publicly available information and document efforts to strengthen these systems. In the interim, the EITI Report itself should include the information set out in 3.9(b) above.

3.10 Allocation of licenses

1. Implementing countries are required to disclose information related to the award or transfer of licenses pertaining to the companies covered in the EITI Report, including: a description of the process for transferring or awarding the license; the technical and financial criteria used; information about the recipient(s) of the license that has been transferred or awarded, including consortium members where applicable; and any non-trivial deviations from the applicable legal and regulatory framework governing license transfers and awards.
2. Where licenses are awarded through a bidding process during the accounting period covered by the EITI Report, the government is required to disclose the list of applicants and the bid criteria.
3. Where the requisite information set out in 3.10(a) and 3.10(b) above is already publicly available, it is sufficient to include a reference or link in the EITI Report.
4. The multi-stakeholder group may wish to include additional information on the allocation of licenses in the EITI Report, including commentary on the efficiency and effectiveness of these systems.

3.11 Beneficial ownership

1. It is recommended that implementing countries maintain a publicly available register of the beneficial owners of the corporate entity(ies) that bid for, operate or invest in extractive assets, including the identity(ies) of their beneficial owner(s) and the level of ownership. Where this information is already publicly available, e.g. through filing to corporate regulators and stock exchanges, the EITI Report should include guidance on how to access this information.
2. Where such registers do not exist or are incomplete, it is recommended that implementing countries request companies participating in the EITI process provide this information for inclusion in the EITI Report.3
3. It is required that the government and/or state owned enterprises disclose their level of beneficial ownership in oil, gas and mining companies operating within the country, and any changes in the level of ownership during the accounting period covered by the EITI Report (Requirement 3.6(c)).
   Learn more: Guidance on state-ownership
4. Definition of beneficial ownership:
   1. A beneficial owner in respect of a company means the natural person(s) who directly or indirectly ultimately owns or controls the corporate entity.
   2. Where the multi-stakeholder group addresses beneficial ownership, the multi-stakeholder group should agree an appropriate definition of the term beneficial owner. The definition should be aligned with 3.11(d)(i) above and take international norms and relevant national laws into account.
   3. Publicly listed companies, including wholly-owned subsidiaries, are not required to disclose information on their beneficial owner(s).
   4. 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 as per 3.11(d)(iii). Each entity is responsible for the accuracy of the information provided.
      Learn more: Guidance on beneficial ownership

3.12 Contracts

1. Implementing countries are encouraged to publicly disclose any contracts and licenses that provide the terms attached to the exploitation of oil, gas and minerals.
2. It is a requirement that the EITI Report documents the government’s policy on disclosure of contracts and licenses that govern the exploration and exploitation of oil, gas and minerals. This should include relevant legal provisions, actual disclosure practices and any reforms that are planned or underway. Where applicable, the EITI Report should provide an overview of the contracts and licenses that are publicly available, and include a reference or link to the location where these are published.
3. The term contract in 3.12(a) means:
   1. the full text of any contract, concession, production-sharing agreement or other agreement granted by, or entered into by, the government which provides the terms attached to the exploitation of oil gas and mineral resources;
   2. the full text of any annex, addendum or rider which establishes details relevant to the exploitation rights described in 3.12(c)(i) or the execution thereof; and
   3. the full text of any alteration or amendment to the documents described in 3.12(c)(i) and 3.12(c)(ii).
4. The term license in 3.12(a) means:
   1. the full text of any license, lease, title or permit by which a government confers on a company(ies) or individual(s) rights to exploit oil, gas and/or mineral resources;
   2. the full text of any annex, addendum or rider that establishes details relevant to the exploitation rights described in in 3.12(d)(i) or the execution thereof; and
   3. the full text of any alteration or amendment to the documents described in 3.12(d)(i) and 3.12(d)(ii).
      Learn more: Guidance on contracts

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Requirement 4

The EITI requires the production of comprehensive EITI Reports that include full government disclosure of extractive industry revenues and disclosure of all material payments to government by oil, gas and mining companies.

4.1 Defining the taxes and revenues to be covered in the EITI Report

1. In advance of the reporting process, the multi- stakeholder group is required to agree which payments and revenues are material and therefore must be disclosed, including appropriate materiality definitions and thresholds. Payments and revenues are considered material if their omission or misstatement could significantly affect the comprehensiveness of the EITI Report. A description of each revenue stream, related materiality definitions and thresholds should be included in the EITI Report. In establishing materiality definitions and thresholds, the multi-stakeholder group should consider the size of the revenues streams relative to total revenues. The multi-stakeholder group should document the options considered and the rationale for establishing the definitions and thresholds.
   Learn more: Guidance on comprehensiveness
2. The following revenue streams should be included:
   1. the host government’s production entitlement (such as profit oil);
   2. national state-owned company production entitlement;
   3. profits taxes;
   4. royalties;
   5. dividends;
   6. bonuses, such as signature, discovery and production bonuses;
   7. licence fees, rental fees, entry fees and other considerations for licences and/or concessions; and
   8. any other significant payments and material benefit to government.

      Any revenue streams or benefits should only be excluded where they are not applicable or where the multi-stakeholder group agrees that their omission will not materially affect the comprehensiveness of the EITI Report.

   Guidance on taxes and other revenues

3. Sale of the state’s share of production or other revenues collected in-kind: Where the sale of the state’s share of production or other revenues collected in-kind is material, the government, including state owned enterprises, are required to disclose the volumes sold and revenues received. The published data must be disaggregated to levels commensurate with the reporting of other payments and revenue streams (Requirement 5.2.e). Reporting could also break down disclosures by the type of product, price, market, and sale volume. Where practically feasible, the multi-stakeholder group is encouraged to task the Independent Administrator with reconciling the volumes sold and revenues received by including the buying companies in the reporting process.

   Guidance on in-kind revenues

4. Infrastructure provisions and barter arrangements: The multi-stakeholder group and the independent administrator are required to consider whether there are any agreements, or sets of agreements, involving the provision of goods and services, including loans, grants and infrastructure works, in full or partial exchange for oil, gas or mining exploration or production concessions
   or physical delivery of such commodities. To be able to do so, the multi- stakeholder group and the Independent Administrator need to gain a full understanding of the terms of the relevant agreements and contracts, the parties involved, the resources which have been pledged by the state, the value of the balancing benefit stream, e.g. infrastructure works, and the materiality
   of these agreements relative to conventional contracts. Where the multi- stakeholder group concludes that these agreements are material, the multi- stakeholder group and the Independent Administrator are required to ensure that the EITI Report addresses these agreements, providing a level of detail and transparency commensurate with the disclosure and reconciliation of other payments and revenues streams. Where reconciliation of key transactions is not feasible, the multi-stakeholder group should agree an approach for unilateral disclosure by the parties to the agreement(s) to be included in the EITI Report.
   Learn more: Guidance on infrastructure provisions and barter arrangements
5. Social expenditures: Where material social expenditures by companies are mandated by law or the contract with the government that governs the extractive investment, the EITI Report must disclose and, where possible, reconcile these transactions.
   1. Where such benefits are provided in-kind, it is required that the EITI Report discloses the nature and the deemed value of the in-kind transaction. Where the beneficiary of the mandated social expenditure is a third party, i.e. not a government agency, it is required that the name and function of the beneficiary is disclosed.
   2. Where reconciliation is not feasible, the EITI Report should include unilateral company and/or government disclosures of these transactions.
   3. Where the multi-stakeholder group agrees that discretionary social expenditures and transfers are material, the multi-stakeholder group
      is encouraged to develop a reporting process with a view to achieving transparency commensurate with the disclosure of other payments and revenue streams to government entities. Where reconciliation of key transactions is not possible, e.g. where company payments are in-kind or to a non-governmental third party, the multi-stakeholder group may wish to agree an approach for voluntary unilateral company and/or government disclosures to be included in the EITI Report.
      Learn more: Guidance on social expenditures
6. Transportation: Where revenues from the transportation of oil, gas and minerals constitute one of the largest revenue streams in the extractive sector, the government and state-owned enterprises (SOEs) are expected to disclose the revenues received. The published data must be disaggregated to levels commensurate with the reporting of other payments and revenue streams (Requirement 5.2.e). The EITI Report could include:
   1. a description of the transportation arrangements including: the product; transportation route(s); and the relevant companies and government entities, including SOE(s), involved in transportation;
   2. definitions of the relevant transportation taxes, tariffs or other relevant payments, and the methodologies used to calculate them;
   3. disclosure of tariff rates and volume of the transported commodities;
   4. disclosure of revenues received by government entities a SOE(s), in relation to transportation of oil, gas and minerals; and
   5. where practicable, the multi-stakeholder group is encouraged to task the Independent Administrator with reconciling material payments and revenues associated with the transportation of oil, gas and minerals.
      Learn more: Guidance on transportation revenues

4.2 Defining which companies and government entities are required to report

1. The EITI Report must provide a comprehensive reconciliation of government revenues and company payments, including payments to and from state owned enterprises, in accordance with the agreed scope (Requirement 4.1). All companies making material payments to the government are required to comprehensively disclose these payments in accordance with the agreed scope. An entity should only be exempted from reporting if it can be demonstrated that its payments and revenues are not material. All government entities receiving material revenues are required to comprehensively disclose these revenues in accordance with the agreed scope.
2. Unless there are significant practical barriers, the government is additionally required to provide, in aggregate, information about the amount of total revenues received from each of the benefit streams agreed in the scope of the EITI Report, including revenues that fall below agreed materiality thresholds. Where this data is not available, the Independent Administrator should draw on any relevant data and estimates from other sources in order to provide a comprehensive account of the total government revenues.
   Learn more: Guidance on comprehensiveness
3. State-owned enterprises (SOEs): The multi-stakeholder group must ensure that the reporting process comprehensively addresses the role of SOEs, including material payments to SOEs from oil, gas and mining companies, and transfers between SOEs and other government agencies.
   Learn more: Guidance on transactions between SOEs and government entities
4. Subnational payments: It is required that the multi-stakeholder group establish whether direct payments, within the scope of the agreed benefit streams, from companies to subnational government entities are material. Where material, the multi-stakeholder group is required to ensure that company payments
   to subnational government entities and the receipt of these payments are disclosed and reconciled in the EITI Report.
   Learn more: Guidance on subnational direct payments
5. Subnational transfers: Where transfers between national and subnational government entities are related to revenues generated by the extractive industries and are mandated by a national constitution, statute or other revenue sharing mechanism, the multi-stakeholder group is required to ensure that material transfers are disclosed in the EITI Reports. The EITI
   Report should disclose the revenue sharing formula, if any, as well as any discrepancies between the transfer amount calculated in accordance with the relevant revenue sharing formula and the actual amount that was transferred between the central government and each relevant subnational entity. The multi-stakeholder group is encouraged to reconcile these transfers. The multi- stakeholder group is encouraged to ensure that any material discretionary or ad-hoc transfers, are also disclosed and where possible reconciled in the EITI Report. Where there are constitutional or significant practical barriers to the participation of subnational government entities, the multi-stakeholder group may seek adapted implementation in accordance with requirement 1.5.
   Learn more: Guidance on sub-national transfers

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Requirement 5

The EITI requires a credible assurance process applying international standards.

5.1 Appointment of the Independent Administrator

The reconciliation of company payments and government revenues must be undertaken by an Independent Administrator applying international professional standards. The Independent Administrator must be perceived by the multi- stakeholder group to be credible, trustworthy and technically competent. The multi-stakeholder group should endorse the appointment of the Independent Administrator.

5.2 Agreement of Independent Administrator’s Terms of Reference

The multi-stakeholder group and the Independent Administrator are required to agree terms of reference in accordance with the ‘agreed upon procedure for EITI Reports‘and based on the standard Terms of Reference endorsed by the EITI Board (request from the International Secretariat). Should the multi-stakeholder group wish to adapt or deviate from these agreed upon procedures, approval from the EITI Board must be sought in advance (Requirement 1.5).

In agreeing the Terms of Reference, the multi-stakeholder group and the Independent Administrator are required to:

1. agree the reporting templates for the EITI Report in accordance with the scope of the EITI Report (see requirement 4);
2. review audit and assurance practices. The multi-stakeholder group, in consultation with the Independent Administrator, is required to examine
   the audit and assurance procedures in companies and government entities participating in the EITI reporting process, including the relevant laws and regulations, any reforms that are planned or underway, and whether these procedures are in line with international standards.5 It is recommended that the EITI Report includes a summary of the findings;
3. agree on the assurances to be provided by reporting entities to the Independent Administrator. The terms of reference must outline what information should be provided to the Independent Administrator by the participating companies and government entities to assure the credibility of the data. The multi-stakeholder group and the Independent Administrator should document the options considered and the rationale for the assurances to be provided. Where deemed necessary by the Independent Administrator and the multi-stakeholder group, assurances may include:
   1. That a senior company or government official from each reporting entity signs off on the completed reporting form as a complete and accurate record.
   2. That the companies attach a confirmation letter from their external auditor that confirms that the information they have submitted is comprehensive and consistent with their audited financial statements. The multi-stakeholder group may wish to phase in any such procedure so that the confirmation letter may be integrated into the usual work programme of the company’s auditor. Where some companies are not required by law to have an external auditor and therefore cannot provide such assurance, this should be clearly identified, and any reforms that are planned or underway should be noted.
   3. Where relevant and practicable, government reporting entities may be requested to obtain a certification of the accuracy of the government’s disclosures from their external auditor or equivalent; and
4. agree appropriate provisions relating to safeguarding confidential information.
5. The multi-stakeholder group is required to agree the level of disaggregation for the publication of data. It is required that EITI data is presented by individual company, government entity, and revenue stream. Reporting at project level is required, provided that it is consistent with the United States Securities and Exchange Commission rules and the forthcoming European Union requirements.
   Learn more: Guidance on th level of disaggregation

5.3 Assessment and recommendations from the Independent Administrator

1. In accordance with the Term of Reference, the Independent Administrator should prepare an EITI Report that comprehensively reconciles the information disclosed by the reporting entities, identifying any discrepancies.
2. The Independent Administrator should produce electronic data files that can be published together with the EITI Report. Summary data from each EITI Report should be submitted electronically to the International Secretariat according to the standardised reporting format provided by the International Secretariat.
   Learn more: Guidance on access
3. The EITI Report should include an assessment from the Independent Administrator on the comprehensiveness and reliability of the data presented, including an informative summary of the work performed by the independent administrator and the limitations of the assessment provided. Based on the government’s disclosure of total revenues as per Requirement 4.2(b) the Independent Administrator should indicate the coverage of the reconciliation exercise.
4. The assessment should include an assessment of whether all companies and government entities within the agreed scope of the EITI reporting process provided the requested information. Any gaps or weaknesses in reporting to the Independent Administrator must be disclosed in the EITI Report, including naming any entities that failed to comply with the agreed procedures, and
   an assessment of whether this is likely to have had material impact on the comprehensiveness of the report.
5. It is required that the EITI Report documents whether the participating companies and government entities had their financial statements audited in the financial year(s) covered by the EITI Report. Any gaps or weaknesses must be disclosed. Where audited financial statements are publicly available, it is recommended that the EITI Report advises readers on how to access this information.
6. The Independent Administrator may wish to make recommendations for strengthening the reporting process in the future, including any recommendations regarding audit practices and reforms needed to bring them into line with international standards. Where previous EITI Reports have recommended corrective actions and reforms, the Independent Administrator should comment on the progress in implementing those measures.
   Learn more: Guidance on data quality

5.4 The multi-stakeholder group should endorse the EITI Report prior to its publication.

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Requirement 6

The EITI requires EITI Reports that are comprehensible, actively promoted, publicly accessible, and contribute to public debate.

6.1 The multi-stakeholder group must ensure that the EITI Report is comprehensible, actively promoted, publicly accessible and contributes to public debate. Key audiences should include government, parliamentarians, civil society, companies and the media. The multi-stakeholder group is required to:

1. produce paper copies of the EITI Report, and ensure that they are widely distributed. Where the report contains extensive data, e.g., voluminous files, the multi-stakeholder group is encouraged to make this available online;
2. make the EITI Report available on-line, and publicise its availability;
3. ensure that the EITI Report is comprehensible, including by ensuring that it is written in a clear, accessible style and in appropriate languages; and
4. ensure that outreach events, whether organised by government, civil society or companies, are undertaken to spread awareness of and facilitate dialogue about the EITI Report across the country.
   Learn more: Guidance on public debate

6.2 The multi-stakeholder group is encouraged to make EITI Reports machine readable, and to code or tag EITI Reports and data files so that the information can be compared with other publicly available data. As per Requirement 3.7(b), the multi-stakeholder group is encouraged to reference national revenues classification systems, and international standards such as the IMF Government Finance Statistics Manual. The multi-stakeholder group is encouraged to:

1. produce brief summary reports, with clear and balanced analysis of the information, ensuring that the authorship of different elements of the EITI Report is clearly stated;
   Learn more: Guidance on data quality
2. summarize and compare the share of each revenue stream to the total amount of revenue that accrues to each respective level of government;
3. where legally and technically feasible, consider automated online disclosure of extractive revenues and payments by governments and companies on a continuous basis. This may include cases where extractive revenue data is already published regularly by government or where national taxation systems are trending towards online tax assessments and payments. Such continuous government reporting could be viewed as interim reporting, and as an integral feature of the national EITI process which is captured by the reconciled EITI Report issued annually; and
4. undertake capacity-building efforts, especially with civil society and through civil society organisations, to increase awareness of the process, improve understanding of the information and data from the reports, and encourage use of the information by citizens, the media, and others.
   Learn more: Guidance on access to information

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Requirement 7

The EITI requires that the multi-stakeholder group takes steps to act on lessons learned and review the outcomes and impact of EITI implementation.

7.1 The multi-stakeholder group is required to take steps to act upon lessons learned; to identify, investigate and address the causes of any discrepancies; and to consider recommendations for improvement from the Independent Administrator.

7.2 The multi-stakeholder group is required to review the outcomes and impact of EITI implementation on natural resource governance.

1. The multi-stakeholder group is required to publish annual activity reports.6 The annual activity reports must include:
   1. a summary of EITI activities undertaken in the previous year;
   2. an assessment of progress with meeting and maintaining compliance with each EITI requirement, and any steps taken to exceed the requirements. This should include any actions undertaken to address issues such as revenue management and expenditure (3.7-3.8), transportation payments (4.1.f), discretionary social expenditures (4.1.e), ad-hoc subnational transfers (4.2.e), beneficial ownership (3.11) and contracts (3.12);
   3. an overview of the multi-stakeholder group’s responses to and progress made in addressing the recommendations from reconciliation and Validation in accordance with Requirement 7.1.a. The multi-stakeholder group is encouraged to list each recommendation and the corresponding activities that have been undertaken to address the recommendations;
   4. an assessment of progress with achieving the objectives set out in its workplan (Requirement 1.4), including the impact and outcomes of the stated objectives; and
   5. a narrative account of efforts to strengthen EITI implementation, including any actions to extend the detail and scope of EITI reporting or to increase engagement with stakeholders.
      Learn more: Guidance on annual activity reports
2. All stakeholders should be able to participate in the production of the annual activity report and reviewing the impact of EITI implementation. Civil society groups and industry involved in the EITI, particularly, but not only those serving on the multi-stakeholder group, should be able to provide feedback on the EITI process and have their views reflected in the annual activity report.
   Learn more: Guidance on annual activity reports
3. The multi-stakeholder group is required to submit a Validation Report in accordance with the deadlines established by the EITI Board (Requirement 1.6).