Policy Update: Government of Canada tables legislation to amend the Canada Business Corporations Act

Sep 30, 2016
 
This week, the Government of Canada tabled a bill to amend the Canada Business Corporations Act. The legislation follows over two years of stakeholder consultation and is aimed at modernizing Canada's legal and regulatory framework for nearly 270,000 federally incorporated corporations. The legislation would also amend the Canada Cooperatives Act and the Canada Not-for-profit Corporations Act.

Some important changes proposed in the legislation include requirements for listed CBCA corporations to hold annual elections and individual votes for director candidates. These are requirements to which TSX-listed companies must already adhere. Another proposed change would see directors being elected by majority voting when the number of candidates is the same as the number of positions to be filled. This change would effectively standardize majority voting and is accompanied by other relevant amendments that aim to address concerns over failed director elections raised by the ICD during consultation.

Another important change would modify the CBCA's requirements for paper-based communications by replacing this with a "notice and access" system, allowing corporations to use electronic communications to provide notice of meetings to shareholders and online access to relevant documents. This is an amendment that is strongly supported by the ICD.

To support the representation of women on boards, reporting issuers 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. This is a legislative codification of existing provincial regulations and is consistent with the ICD’s support for board diversity and “comply or explain”.

As members will remember, the ICD submitted a comment letter during the consultation period, which was accompanied by active engagement. We are pleased that many of the proposals in the Government’s Consultation Paper were modified in the legislation and reflect many positions supported by the ICD.
We welcome the government’s initiative to modernize Canada’s legal and regulatory business framework. We will continue to review the legislation and work with the Ministry of Innovation, Science and Economic Development to ensure that statutory changes reflect the highest principles of governance.

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