Canada: Public Company Boards: Plan For Proposed Corporate Governance Changes

Last Updated: December 7 2016
Article by Basia Dzierzanowska and Julie Robinson

Corporate governance of Canadian public companies might look a bit different in 2017. On September 28, 2016, the federal government introduced Bill C-25, aimed at amending the Canadian Business Corporations Act (CBCA) as a result of Industry Canada's consultations on the CBCA corporate governance framework. The proposed amendments largely put the CBCA rules for election of directors, shareholder communications and diversity disclosure in congruence with those already applicable to many reporting issuers. In addition, proposed amendments to the Toronto Stock Exchange (TSX) Company Manual may enhance governance disclosure for TSX-listed companies in the coming years.

Neither when (or even if) the amendments will come into effect (they are still moving though the approval process), nor their scope (regulations delineating the details of the changes to the CBCA aren't yet published and likely won't be until the amendments become law) are clear. But boards would be wise to add planning for them to their New Year's resolutions. If and when they do take effect, they will change the corporate governance landscape of many public companies, and boards will need to be prepared to comply. Here are four key aspects of the corporate governance for public companies that could change in 2017.

Reforms to Shareholder Democracy in CBCA "Distributing Corporations". The proposed CBCA amendments mandate material changes to the election of directors of "distributing corporations" with the objective of strengthening shareholder democracy, promoting directors' accountability to shareholders and introducing checks on the power of corporate boards. While "distributing corporations" generally means "reporting issuers", the scope of corporations to which the proposed rules will apply is yet to be identified in regulations.

  • Requirement for Annual Election of Directors. Bill C-25 proposes to limit the term of a director of prescribed CBCA corporations to one (1) year. This is consistent with the rules that apply to TSX-listed corporations. Currently, CBCA corporations can have staggered boards and allow directors to hold terms beyond one year, making it unnecessary to elect a full board of directors each year. Bill C-25 allows for an exemption from annual elections for "any prescribed class of distributing corporations" or "any prescribed circumstances respecting distributing corporations", which would allow up to three-year terms and staggered boards. But the scope of these exemptions will only be detailed in the as-yet unpublished regulations.
  • Separate Votes for Directors in Prescribed Corporation. The proposed amendments would also abolish election of directors using slates as far as "prescribed corporations" are concerned, with the exception of certain "prescribed corporations" (the details of which will be identified in the regulations). The rules propose that a separate vote of shareholders must be taken with respect to each candidate nominated for director. Again, these changes would make the CBCA consistent with director election rules applicable to TSX-listed issuers.
  • Requirement for Majority Vote to be Elected. The proposed amendments require that for distributing corporations, where only one candidate is nominated for each board position, shareholders can only vote "for" or "against" the candidate. The candidate will only be elected if the number of "for" votes represents a majority of the total votes cast by shareholders. This majority voting rule is in line with requirements for TSX-listed companies. Currently, without majority voting, directors are elected based on a plurality of votes where shareholders either vote "for" a candidate or withhold their vote; a candidate is elected even if a single vote is cast in their favour. With majority voting, if the election results in a greater number of votes "against" the candidate, the board can't appoint that candidate as a director before the next shareholders' meeting except in "prescribed circumstances" that the regulations don't yet define. This change would prevent situations where a candidate for the board doesn't receive majority support, but is elected by a minority of "yes" shareholder votes or is appointed by the board.

Modernized Communications to CBCA Company Shareholders. The proposed CBCA amendments also allow for modernizing the method of communication with shareholders of CBCA corporations. The proposed amendments would exempt CBCA corporations, upon the CBCA Director's approval, from existing notice requirements and allow them to provide shareholders with proxy materials and financial statements through alternative methods, such as notice-and-access delivery methods available to public companies. This will streamline the process for CBCA corporations to use notice-and-access and help them achieve cost-savings, while being more environmentally friendly, with fewer documents being printed and sent by mail.

Mandated Diversity Disclosure to CBCA Company Shareholders. Because it's ... 2017, the proposed CBCA amendments will require directors of "prescribed corporations" to place before shareholders, at every annual meeting, "prescribed information" about diversity among directors and senior management members as set out in the (still not published) amended CBCA regulations. The "prescribed corporation" will also be required to send information about diversity to each shareholder unless that shareholder has specifically informed the corporation they don't want to receive it. Again, however, which corporations will be subject to and the extent of this disclosure won't be clear until regulations disclose the meanings of "prescribed corporations" and "prescribed information". These amendments are playing catch up to the 2014 amendments to National Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101) requiring certain reporting issuers to disclose data on the participation of women on corporate boards and in senior management. NI 58-101 also requires certain reporting issuers to disclose policies relating to promotion of diversity on boards and adopt a "comply or explain" model whereby reporting issuers either inform shareholders about diversity policies, or disclose reasons they don't have such policies. Whether the CBCA goes as far as adopting a "comply or explain" model remains to be seen when (and if) the amendments are made into law and the regulations are published.

Website and Governance Disclosure for TSX-Listed Issuers. The TSX published in Spring 2016 proposed amendments to its Company Manual to introduce website disclosure requirements and amend the disclosure requirements regarding security-based compensation arrangements for TSX-listed issuers. The amendments, if they come into effect as proposed, will require TSX-listed issuers to post and maintain on a publicly accessible website copies of certain corporate governance documents, including corporate policies, security holder rights plans and security-based compensation arrangements. The amendments will also update disclosure requirements regarding security-based compensation arrangements, reflecting current trends in those arrangements being used by TSX-listed issuers.

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.

Events from this Firm
19 Nov 2018, Conference, Las Vegas, United States

Join McInnes Cooper’s CEO/Managing Partner, Hugh Wright, at the Annual Canadian Employee Benefits Conference as he discusses legal developments across Canada and legislative updates in Atlantic Canada.

In association with
Related Topics
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions