The federal government's recently released 2015 Budget
(Budget) indicates that the government will be proposing amendments
to the Canada Business Corporations Act (CBCA) relating to gender
diversity, director elections, shareholder communications and
Industry Canada had previously issued a consultation paper,
seeking input on possible changes to the CBCA relating to executive
compensation, shareholder voting rights, composition of corporate
boards and management, shareholder voting and communication, board
accountability and corporate social responsibility. The
consultation was described in our December 2013 Blakes Bulletin: CBCA Consultation: Another Cook in the
Corporate Governance Kitchen.
The Budget indicates that the proposed amendments will
"promote gender diversity among public companies, using the
widely recognized 'comply or explain model' of disclosure
currently required for TSX listed companies and by most provincial
securities regulators." As no actual proposed amendments have
been released, it is not clear whether the amendments will extend
the requirements currently imposed by securities regulators, for
example, by extending these to private companies or providing for
additional required disclosure, or will simply be redundant to
existing provincial securities legislation.
The Budget also indicates that CBCA amendments will be proposed
to modernize "director election processes and communications
with shareholders." Again, the text of amendments has not been
released, although they could address matters such as individual
election of directors and majority voting policies, to which
companies listed on the Toronto Stock Exchange are already
The amendments will also "strengthen corporate transparency
through an explicit ban on bearer instruments." The purpose of
this amendment is not apparent, as the CBCA already provides that
shares must be issued in registered form which precludes shares
being in bearer form. It may be referring to debt instruments, such
as promissory notes.
The Budget heading for this section indicates that the
amendments will reduce the regulatory burden on Canadian
businesses, although there is no explanation provided as to how the
specified amendments would actually do so.
It is also not clear whether the amendments to the CBCA referred
to in the Budget are the only amendments that will be proposed
arising out of the CBCA consultation process.
Although the Budget indicates amendments to related statutes
will be made to ensure alignment among federal laws and states the
amendments will also be made to not-for-profit corporations and
co-operatives legislation, no reference is made to such amendments
being made to the analogous provisions in federal banks and
insurance companies legislation.
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