On March 8, 2016, the Institute of Corporate Directors (ICD)
released its guidance on director-shareholder
engagement in response to demands from investors,
including activist shareholders, for increased and better dialogue
with their corporate boards. While traditionally management has
been primarily responsible for interacting with shareholders, ICD
now believes that directors can play a meaningful role in
shareholder engagement and may serve to mitigate tensions related
to board and corporate governance. In the words of its President
and CEO, Stan Magidson, the approach of the ICD is to see this as
an opportunity to “build bridges, enhance mutual
understanding and provide valuable insights.” The ICD
guidance is framed around six core recommendations: knowing your
investors, recognizing the benefits of engagement, adopting a
strategic and tailored process, framing your discussion
appropriately, addressing the real decision-makers and making the
most of what comes out of the discussion. Its ultimate aim, as
noted, is to encourage a productive climate of mutual trust between
Canadian corporations and their shareholders.
ICD recognizes that to a certain extent this type of engagement
is already taking place, whether directly, through ad hoc meetings
with institutional investors, or indirectly, through the efforts of
such organizations as the Canadian Coalition for Good Governance.
The change that the guidance recommends is essentially to formalize
the director-shareholder engagement process and make it more
board-driven. While the U.S. Shareholder-Director Exchange
Protocol (“SDX Protocol”), in place since
2014, was a useful reference for the ICD as it developed its
guidance, differences in the U.S. marketplace and in the legal
understanding of directors’ duties in Canada necessitated a
unique “made-in-Canada” approach.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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