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Canada legislates to improve governance, diversity

Canada has introduced a bill aimed at improving its corporate governance framework. An Act to amend the Canada Business Corporations Act (CBCA), the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act and the Competition Act includes proposals to increase shareholder democracy and participation, support the push to increase women’s board participation, improve corporate transparency and business certainty.

The Hon Navdeep Bains

The Hon Navdeep Bains

Navdeep Bains, Minister of Innovation, Science and Economic Development, said, “By adopting best practices and bringing our business frameworks up to date, the government of Canada is demonstrating its commitment to broad-based growth that benefits all Canadians. We are also showing our support for diversity, particularly in increasing the participation of women on corporate boards and senior management teams. A strong corporate governance framework enhances investor confidence, business efficiency and economic growth. That means creating more of the well-paying jobs that benefit the middle class and those working hard to join it.”

The government said the laws seek to promote investor confidence and support long-term investment building on Canada’s Innovation Agenda. This includes efforts to promote innovation and inclusive growth and help all Canadians contribute to and share in the prosperity of the country.

Specific measures in the bill include proposals for CBCA corporations to hold

  • annual elections,
  • individual votes for director candidates, and
  • majority vote standard for uncontested positions.

In terms of proxy plumbingThe CBCA’s requirements for paper-based communications will be replaced by a “notice and access” system, allowing corporations to use electronic communications to provide notice of meetings to shareholders and online access to relevant documents. The deadline for shareholders to submit proposals will also be simplified. Finally, amendments clarify that all shares and share warrants must be in registered form, prohibiting the issuance and use of bearer shares.

In respect of board diversity CBCA corporations will be required to identify the gender composition of their boards and senior management and to disclose their diversity policies or explain why none are in place.

The affiliation rules under the Competition Act will be updated so that they fully integrate all business models and recognize how firms operate in the modern marketplace. This will ensure that activities between affiliated entities do not unwittingly trigger investigations or merger reviews by the Competition Bureau, the government said.

 

What do you think?