Industry Canada has published a consultation paper seeking input on a wide
array of possible changes to the Canada Business Corporations
Act (CBCA) including a number of issues currently under
consideration or recently addressed (or considered and
intentionally not addressed) by Canadian securities regulators
and/or the Toronto Stock Exchange (TSX).
The paper addresses a number of governance topics including
say-on-pay, majority voting for director elections, diversity on
corporate boards, residency requirements for directors, socially
responsible enterprises, and combating bribery and corruption, as
well as technical issues such as the use of plans of arrangement by
insolvent corporations, limitations on the exercise of dissent
rights, and dealing with property of dissolved corporations.
The paper deals with topics recommended for consultation by a
House of Commons Committee that reviewed the CBCA in 2009-2010. At
this time, Industry Canada has not put forward alternatives to
existing provisions, but instead is seeking public comments and
Any changes to the CBCA would affect nearly 235,000 federally
incorporated corporations, including almost half of Canada's
largest publicly traded companies. The issues identified for
discussion include the following.
Shareholder advisory votes on compensation packages (i.e.,
Shareholder nomination of alternative directors in management
Permitting persons to solicit proxies from greater than 15
shareholders without sending a dissident proxy circular
Facilitating shareholder access to the oppression remedy
CORPORATE SOCIAL RESPONSIBILITY
Incorporation under the CBCA of entities with profit-making and
Disclosure of board of directors' understanding of social
and environmental matters
Provisions to promote corporate social responsibility
Industry Canada is seeking comments from the public until March
Many questions arise from the consultation paper, including
whether corporate governance should be dealt with in the CBCA or by
the Canadian securities regulators (and the TSX), whether the CBCA
should be more rigorous regarding publicly traded corporations, and
how changes to the CBCA would be coordinated with separate federal
agreements concluded on material regulation of securities law.
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