The federal government announced today as part of its 2015
budget that the 2015 Economic Action Plan will include proposed
amendments to the Canada Business Corporations Act (CBCA)
to promote gender diversity in public companies, using the
"comply or explain" model of disclosure currently
required by most provincial securities regulators
for TSX-listed companies. The budget announcement also
promises to modernize director election processes and
communications with shareholders.
As we previously reported in Industry Canada Launches Public Consultation on the Canada
Business Corporations Act, in December 2013, Industry Canada
undertook a public consultation on the CBCA with the release of a
discussion paper inviting comments on a number of corporate
governance issues. The objectives of the consultation were to
ensure that the governance framework for CBCA companies remains
effective, fosters competitiveness, supports investment and
entrepreneurial activity, and instills investor and business
confidence. Today's budget announcement indicates that the
government will amend the CBCA to address several governance issues
raised in the consultation.
In addition to the promotion of gender diversity within board
and executive ranks of CBCA corporations, the consultation also
raised the potential adoption of a majority voting requirement for
the election of directors of public companies incorporated under
the CBCA and the facilitation of the "notice and access"
method for shareholder communications, which is currently not
available to CBCA companies. The budget announcement suggests that
majority voting and notice-and-access could also be implemented
through forthcoming CBCA amendments.
The budget announcement suggests that the amendments to the CBCA
to promote gender diversity in public companies will impose
requirements that are consistent with the amendments to the
comply-or-explain disclosure model under National Instrument 58-101
– Disclosure of Corporate Governance Practices
recently adopted by the securities regulatory authorities of
Ontario, Québec, Manitoba, New Brunswick, Newfoundland and
Labrador, Northwest Territories, Nova Scotia, Nunavut and
Saskatchewan. The enhanced disclosure requirements now mandate
disclosure of, among other things, the number and proportion of
women on the board and in executive officer positions, the
board's consideration of the level of female representation in
nominating and appointing directors and executives, and written
policies on the representation of women on the board. These
requirements apply to all TSX-listed and other non-venture issuers
with financial years ending on or after December 31, 2014, with the
relevant disclosure required to be included in their annual
management proxy circulars or annual information forms.
Whether the CBCA amendments promised today will enhance current
disclosure requirements or merely require comparable disclosure for
all publicly traded CBCA companies remains to be seen.
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