Canada: OSFI's Revised Corporate Governance Guideline Goes Live

Last Updated: October 4 2018
Article by Carol Lyons

On September 18, 2018 the Office of the Superintendent of Financial Institutions (OFSI) issued the final version of its Corporate Governance Guideline (the CG Guideline). The CG Guideline applies to OSFI-regulated financial institutions, including banks, bank holding companies, trust and loan companies, cooperative credit and retail associations, fraternals, insurance companies, and insurance holding companies. A draft version of the CG Guideline was published by OSFI in November 2017. It has now been finalized after a period of public consultation. In keeping with usual practise, very few changes were made to the draft CG Guideline after OSFI's consideration of comments made by stakeholders during the public consultation, and the changes that were made are not overly substantive.

According to Assistant Superintendent Carolyn Rogers as stated in her cover letter dated September 18, 2018 that accompanied the final CG Guideline, the revised CG Guideline contains clear principles that replace OSFI's expectations of boards contained in various OSFI risk management and capital guidelines and advisories. Accordingly, OSFI has removed specific requirements relating to the board's responsibilities from those particular guidance documents and advisories because they have now been consolidated in the CG Guideline. These requirements are therefore no longer decentralized in separate documentation.

Examples of OSFI guidelines (relating to insurers) that have been amended to remove references to the board's role and responsibilities relating to the subject matter of the guidance include:

  • A-4 Regulatory Capital and Internal Capital Targets
  • B-3 Sound Reinsurance Practices and Procedures
  • B-9 Earthquake Exposure Sound Practices
  • B-10 Outsourcing of Business Activities, Functions and Processes
  • B-11 Pledging
  • E-13 Regulatory Compliance Management (RCM)
  • E-19 Own Risk and Solvency Assessment

In place of the board-related requirements previously contained in such guidelines (which, in some cases, were detailed and prescriptive), OSFI has inserted language that refers the reader to the CG Guideline for OSFI's expectations of insurer boards of directors with respect to policies relating to capital management and operational, business, risk and crisis management.

OSFI has also rescinded its previous advisory entitled Changes to the Membership of the Board and Senior Management (no longer available on OSFI's website) which contained an elaborate protocol for pre-notification to OSFI of changes in board membership and senior management. A scaled down requirement with respect to advising OSFI of these kinds of personnel changes was contained in the draft CG Guideline and remains in the final version.

OSFI has also revised its Assessment Criteria with respect to the role of boards of directors in light of the final revised CG Guideline. This document includes a description of the criteria OSFI will use to assess the quality of board stewardship and oversight of the institution.

As stated above, there were relatively few changes made to the final guideline following comments from stakeholders. A comparison version of the CG Guideline marked to show the changes made to the draft version can be found at this link. Some of the noteworthy changes can be summarized as follows (references to page numbers are to the blacklined comparison version):

  • A footnote was removed which referred to the Commission of Sponsoring Organizations of the Treadway Commission (COSO) as a specific example of a model for an effective internal control framework (see page 3).
  • The following sentence was added clarifying the delineation of board and management responsibilities: "The Board is not responsible for the ongoing and detailed operationalization of its decisions; this is the responsibility of Senior Management" (see page 4).
  • Reference to the Implementation Standards of the Financial Stability Board (FSB) was removed, although the FSB's Principles for Sound Compensation remain included as a model for compensation policies (see page 4).
  • The specific requirements for board committee member key competencies, including "financial industry and risk management expertise" were removed both with respect to the Risk Committee and the Audit Committee (see pages 9 and 12). These were likely considered to be redundant since the draft CG Guideline already specified that "The Board should, collectively, bring a balance of diversity, expertise, skills, experience, competencies and perspectives". However, this wording was slightly changed in the final CG Guideline to state that "The Board should be diverse and, collectively, bring a balance of expertise, skills...". (see page 6).
  • References to direct reporting lines between the heads of Oversight Functions and the Board/Board Committees were changed to "functional" reporting lines (see pages 5 and 11).

There may be somewhat of a tension between "operational management", "Senior Management" and the "heads of the Oversight Functions". The heads of the Oversight Functions are to be independent from operational management (see page 5), and elsewhere the CG Guideline includes the heads of the Oversight Functions as members of Senior Management (see page 3) and persons directly accountable to the CEO (see page 4). In some smaller institutions, it is possible that the heads of the Oversight Functions, Senior Management and operational management are the same individuals. At the public consultation stage, some commentators had asked OSFI to clarify what is meant by "operational management", among other terms, and OSFI referred to the definition contained in OSFI's Supervisory Framework. The Supervisory Framework states, among other things, that "Operational management is responsible for planning, directing and controlling the day-to-day operations of a significant activity of a FRFI." (see page 14 Appendix B of the Supervisory Framework).


Some organizations may have corporate governance practices and procedures, such as board and committee agendas/work plans, which cross-reference previous versions of OSFI guidance and advisories to identify the particular board-related requirement. These references should be updated to identify the CG Guideline as the source for the requirements, although a list of the various guidelines or advisories should be preserved because it is not OSFI's intention to reduce the board's role in approving and overseeing those matters. Nevertheless, by removing prescriptive expectations as to the board's role and responsibility from such individual guidance, arguably the extent of OSFI's expectations could seem to be less clear. As a practical matter, effort should be made to keep track of all significant policies and procedures that should be overseen by the board; otherwise, it is possible that certain board oversight could fall through the cracks.

On a final note, the updated Assessment Criteria (hyperlink above) is a concise but comprehensive description of OSFI's approach to assessing the effectiveness of boards of directors for the institutions that OSFI supervises. For boards, corporate secretaries and legal personnel, this document can function as a checklist for designing and assessing the company's overall board governance structure and practices. In addition, it would prove to be useful for boards and board committees when conducting their own self-assessments.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2018

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.

Carol Lyons
Similar Articles
Relevancy Powered by MondaqAI
Blake, Cassels & Graydon LLP
Blake, Cassels & Graydon LLP
Blake, Cassels & Graydon LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Blake, Cassels & Graydon LLP
Blake, Cassels & Graydon LLP
Blake, Cassels & Graydon LLP
Related Articles
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