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Beneficial ownership of Guyana oil blocks will have to be disclosed to EITI

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Guyana, as an Extractive Industries Transparency Initiative (EITI) implementing country, is among the those mandated to comply with Requirement 2.5 of the EITI Standard 2019 which relates to full disclosure of beneficial ownership of companies, including those in oil and gas.

Guyana became a full EITI implementing country in October of 2017 and as a requirement submitted its 1st EITI Report in April 2019. Guyana’s 2nd EITI Report, which is due December 31, 2020, is currently being compiled by the Independent Administrator (IA) BDO LLP.

The country is required to implement the Beneficial Ownership Requirement 2.5 in the EITI Standard – the instrument to which Guyana must subscribe as an EITI implementing country and which lays out a number of requirements to ensure transparency in the extractive sector’s management.

Guyana’s Vice President, Bharrat Jagdeo, has said the government is in full support of this initiative. “Every beneficial owner should be known and if the blocks change hands, then they should update this,” he told reporters at a recent press conference in Georgetown. “So, we know at all times who owns the different blocks or what shares of the blocks. I’m in favor of this at any or all times…and the EITI report would be public on that.”

To support compliance with this requirement, the Guyana Extractive Industries Transparency Initiative (GYEITI) Multi-Stakeholder Group (MSG) has so far settled upon a definition of Beneficial Ownership inclusive of Political Exposed Persons (PEP).

The GYEITI is working with the definition as outlined in Guyana’s Anti-Money Laundering And Countering The Financing Of Terrorism (Amendment) (No. 2) Act 2015 which states “beneficial ownership” means ownership by a natural person or persons who ultimately exercise individually or jointly voting rights representing at least twenty-five per cent of the total shares, or otherwise have ownership rights of a legal entity; or ownership by a natural person or persons who ultimately owns or controls a customer or the person on whose behalf a transaction is being conducted and includes those persons who exercise ultimate effective control over a legal person or arrangement.”

This definition of Beneficial Ownership will be used once finalized among local stakeholders.

Beneficial Ownership public register

The 2016 EITI Standard, which guided the preparation of Guyana’s 1st EITI Report for year 2017, had recommended that implementing countries maintain a publicly available register of the beneficial owners of the corporate entity or entities that bid for, operate or invest in extractive assets, including the identity or identities of their beneficial owner(s), the level of ownership and details of how ownership or control is exerted. “Where possible, beneficial ownership information should be incorporated in existing filings by companies to corporate regulators, stock exchanges or agencies regulating extractive industry licensing,” the 1st EITI Report states.

At the time of preparation of the 1st Report in 2018, full details of the beneficial owners of companies operating in Guyana’s extractive industries was not a requirement. However, the GYEITI MSG published a Beneficial Ownership Disclosure Roadmap on June 12, 2019 and it has been recommended that information on beneficial ownership be made publicly accessible and linked to other e-Reporting systems.

The EITI said there will be two stages of assessing Requirement 2.5: Initial Criteria from January 1, 2020 to December 31, 2021 and full criteria from January 1, 2022 to December 31, 2022.

The GYEITI is currently preparing for its first Validation – an assessment of how well the country performed since becoming an EITI implementing country. Validation is expected to commence on October 25, 2020.

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