Canada: Proposed Amendments To The Canada Business Corporations Act And Other Federal Statutes

Last Updated: November 29 2016
Article by Edward Brown and Jack Schroder


On September 28, 2016 the Government of Canada tabled Bill C-25 — An Act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act and the Competition Act (the "Bill"). If passed, the Bill will amend the Canada Business Corporations Act (the "CBCA"), with the stated objectives of:

  • increasing shareholder democracy and participation;
  • increasing women's representation, as well as diversity, on corporate boards and in senior management;
  • improving corporate transparency; and
  • reducing regulatory burden and increasing business certainty.

Corresponding and interpretive changes have been proposed to the other federal statutes affected by the Bill to ensure coherence within the federal corporate governance regime.


In 2014, the previous federal government began seeking input on modifications to Canada's business legislation. Around the same time, the Toronto Stock Exchange ("TSX") introduced a listing requirement that companies listed on the TSX must elect directors individually and adopt majority voting policies. The majority voting policies as prescribed by the TSX require directors to resign if they do not receive a majority of votes cast in an annual election and, absent exceptional circumstances; a board of directors is required to accept the resignation. The proposed amendments in the Bill seek to address some of the input from the 2014 consultation, and additionally bring the CBCA into alignment with certain securities regulations and TSX rules such as the majority voting policy.

Proposed Changes

Shareholder Democracy

The current CBCA framework allows for directors of "distributing corporations" (the concept of "distributing corporations" under the CBCA is closely aligned with the concept of a "reporting issuer" under Canadian securities law) to be elected for terms up to three years in length, and for directors to be nominated and elected on a "slate" rather than an individual basis. Additionally, current legislation allows shareholders to vote "for" or "withhold" with respect to the election of directors. The result is that an uncontested director can successfully win election with a single vote, regardless of the number of votes withheld. The Bill proposes three major changes to director election procedures for distributing corporations:

  • annual elections;
  • election of directors individually; and
  • use of a majority voting standard for uncontested director elections.

The majority voting standard would provide shareholders with the option to vote "for" or "against" each individual candidate. This provides shareholders with a simple method of removing unpopular directors.

The majority voting policy implemented by the TSX is similar to that proposed in the Bill, and requires directors who do not receive a majority of votes to immediately resign. However, the TSX policy also allows a board to reject a director resignation if there are "exceptional" circumstances .

The changes proposed in the Bill would eliminate the discretion afforded to CBCA company boards under the TSX policy. The new rules would make an uncontested candidate's election contingent on receiving a majority of the votes cast "for" their election. In other words, a candidate who receives less than the requisite majority of shareholder votes will not legally hold a seat on the board. The proposed change also prohibits the board of directors from appointing a candidate to the board between annual meetings if that candidate failed to win majority shareholder support at the previous meeting (except in "prescribed circumstances"). The Bill does not propose changes for contested elections, meaning that in contested elections, the candidates with the most votes will win their seats on the board.

Board Diversity

In 2014, the securities commissions in certain provinces of Canada amended National Instrument 58-101 — Disclosure of Corporate Governance Practices ("NI 58-101") to require disclosure on gender diversity policies for senior management and board positions. The requirements under NI 58-101 are based on a "comply or explain" model, which require that TSX listed reporting issuers annually disclose their diversity representation and policies, or explain why none are in place.

The amendments proposed in the Bill mandate that directors must provide shareholders with the "prescribed information" respecting diversity among the board and senior management. However, at the present time it is not clear what information relating to diversity will be required to be disclosed as the "prescribed information" will be outlined in revised regulations, which have not yet been published. We expect that the prescribed information will be closely aligned to the disclosure relating to diversity required by NI 58-101.

Notice and Access

The proposed changes to the CBCA also contemplate simplified shareholder communications. The amendments would allow for "notice and access", which permits a corporation to use electronic communication (rather than physical mailing) to provide notice of meetings and access to relevant documents. Securities regulators have provided for a notice and access system since 2013, although the current text of the CBCA requires the express consent of a shareholder for delivery of electronic documents to be deemed valid. The current text of the Bill would eliminate the uncertainty regarding use of the notice and access rules for distributing CBCA issuers.


The proposed changes will have an impact on the framework of Canadian corporate governance for public corporations incorporated under the CBCA; however, it remains to be seen how the Bill will be further impacted by changes to the CBCA regulations, which at the time of writing have not been published. The regulations will provide clarity on what "prescribed information" and "prescribed circumstances" will apply in the context of the amendments. Considering the government's objectives, changes to the regulations will likely pursue similar alignment with existing law and policy, promotion of diversity and increased corporate accountability and transparency.

Public corporations incorporated under the various provincial or territorial corporate statutes in Canada, including the Alberta Business Corporations Act, will not be impacted by the proposed amendments to the CBCA. At the present time it is unknown whether provincial or territorial governments will follow suit and propose similar changes to the various provincial and territorial corporate statutes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.