Legislating for effective beneficial ownership transparency reforms in the extractive sector
Approaches to legislative reform
Creating new laws or amending existing laws
There are various approaches to legislating for BO transparency. Some governments opt for new, standalone laws. Other governments opt for amending existing legislation. Some countries do this in a staged way, while others do so in a single piece of legislation. There are advantages and disadvantages to each approach, and the best approach will depend on the context; legislative drafting customs and processes; and legal and government systems of the jurisdiction in question.
For example, enacting a standalone law on BO transparency can ensure that all relevant provisions are in the same legislative act, which can enable consistency and enforceability. However, this legislation may also take longer to table, debate and pass. A standalone law may also remove any doubt as to the authority of the tasked agencies and can clearly restate the policy goals behind implementation. However, this means that the success or failure of the reforms may depend on a single law. In all cases, most governments will need to carefully consider all relevant existing legislation. [11] Neither approach precludes sector-specific BO transparency requirements in sector-specific laws.
As countries are likely to be implementing registers to meet other international requirements, government authorities relevant to the extractive industry and prospective data users should ensure they are part of the policy discussions and consultations as well as legislative drafting processes.
Primary and secondary legislation
Irrespective of the approach, consistency across laws is key. Governments have taken different approaches to the amount of detail on specific aspects of BO disclosure to include in either primary or secondary legislation.
There are a number of context-specific considerations that may determine how best to strike this balance. For example, it is typically more difficult to amend primary legislation than secondary legislation. Including many details in primary legislation can protect reforms against future political changes. However, it will also require a higher level of technical knowledge among parliamentarians during its passage. This will make it more difficult to make changes and iterations to the reforms. As BO transparency is a nascent policy area, and standards are still changing, some iteration will be expected and required.
Placing certain details in secondary legislation can enable an iterative approach, provided there is a sufficient level of technical and legal knowledge in the executive to produce regulations. However, placing too many details in secondary legislation may avoid the parliamentary scrutiny and oversight necessary to produce good reforms that are broadly supported and understood. All these aspects should be considered when assessing which level should be placed in primary legislation versus secondary legislation. Considerations of the enforceability of BO transparency provisions in sector-specific legislation may also necessitate certain provisions to be better placed in primary legislation.
In general, the components listed below should be contained in the full body of legislation. The checklists under each component will cover the minimum level of detail expected in primary legislation. Where certain details are not contained in primary legislation, these should be sufficiently covered in secondary legislation. In all cases, globally accepted best practices on legislative drafting and regulatory policy should be applied.
It is also worth noting that some countries may implement BO transparency within different legal systems, such as civil, common, customary law or a combination, as well as different systems of government; for example, a presidential system where legislation can issue decrees that are enacted without parliamentary intervention. While the specific drafting, codification and implementation processes may vary according to each country’s specific context, the core components of a robust legislative framework outlined below apply in all cases.
Notwithstanding the approach to legislative reform and the considerations on the extent of detail that should be in primary or secondary legislation, an effective legislative framework should:
- Consider the full range of existing legislation
- Be coherent and consistent
- Appropriately balance the level of detail included in primary and secondary legislation
- Follow global best practices on legislative drafting and regulatory policy
Footnotes
[11] The range of laws that will need to be considered include: legislation relating to any of the corporate vehicles covered, such as company law, partnership law, and trust law; AML legislation; tax legislation; banking legislation; other industry regulating legislation; extractive governance and licensing legislation; and broader legislation related to transparency and anti-corruption. As BO information comprises personal data, legislators will also need to consider privacy and data protection legislation.