A bill amending the Canada Business Corporations Act
(CBCA), the Competition Act and federal cooperatives and
not-for-profit legislation was tabled for first reading in the
Canadian parliament on September 28, 2016. The changes proposed
(the Amendments) are intended to ensure that Canada continues to
have a modern economic framework that allows federally regulated
corporations to operate flexibly and innovatively. The Amendments
are further intended to increase shareholder democracy and
participation while reducing the burden of regulation.
Election of Directors
directors of public CBCA corporations
will be required to be elected on an individual and annual
basis. Currently the CBCA allows directors to be elected by
slate and for up to a three-year term.
the Amendments introduce majority
voting for the election of directors of public corporations where
there is only one candidate nominated for each position available
on the board. Each nominee must receive a majority of votes to be
elected. If a nominee does not receive a majority of votes, he or
she may not be appointed a director before the next
shareholders' meeting at which directors are elected.
the Amendments regarding election of
directors bring the CBCA substantially in line with the
requirements of the Toronto Stock Exchange (TSX). There will be
prescribed exemptions for certain corporations from these
the notice of a shareholders' meeting and access to related
documentation to be delivered electronically. While securities
legislation was amended in 2013 to introduce notice-and-access, the
current provisions of the CBCA are not entirely compatible with the
full use of notice-and-access by federal corporations. The
Amendments, if enacted, will facilitate the use of
notice-and-access by federal corporations.
the Amendments will simplify the time
frame for a shareholder to submit proposals to a federal
corporation by introducing a prescribed period for submission.
Women on Boards of Directors and in Management
To support the representation of women on the boards of
directors and in senior management of federal corporations, it has
been announced that the Amendments will require distributing
corporations to include disclosure regarding gender diversity among
their directors and senior managers. This will bring the CBCA in
line with Canadian securities regulations pursuant to which
TSX-listed issuers are currently required to make such disclosure
on a "comply or explain" basis.
The Amendments clarify that all shares and warrants of CBCA
corporations must be in registered rather than bearer form to
Competition Act amendments
The definition of "affiliate" in the Competition
Act is proposed to be amended to reflect a broader range of
non-corporate bodies such as trusts, partnerships and other
unincorporated entities by referring to entities rather than
The bill also proposes amendments to the Canada Cooperatives
Act (CCA) and the Canada Not-for-profit Corporations
Act (NFP), which statutes are based on the CBCA. The
Amendments to the CCA include changes regarding election of
directors, transparency and shareholder communication described
above. The Amendments to the NFP are largely of a technical
Regulations that will provide details of the Amendments and
their application are pending. Further in its announcement of the
Amendments, the federal government stated that there are important
corporate governance issues that were raised in the 2014 public
consultation on the CBCA by the government that require further
analysis and consultation. Further changes to the CBCA may be
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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.
While most are well aware that the sale of a business is generally a complex process, even sophisticated business owners are surprised by just how much cost and effort is required to complete the sale.
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