The federal government's recently released 2015 Budget (Budget) indicates that the government will be proposing amendments to the Canada Business Corporations Act (CBCA) relating to gender diversity, director elections, shareholder communications and "corporate transparency."
Industry Canada had previously issued a consultation paper, seeking input on possible changes to the CBCA relating to executive compensation, shareholder voting rights, composition of corporate boards and management, shareholder voting and communication, board accountability and corporate social responsibility. The consultation was described in our December 2013 Blakes Bulletin: CBCA Consultation: Another Cook in the Corporate Governance Kitchen.
The Budget indicates that the proposed amendments will "promote gender diversity among public companies, using the widely recognized 'comply or explain model' of disclosure currently required for TSX listed companies and by most provincial securities regulators." As no actual proposed amendments have been released, it is not clear whether the amendments will extend the requirements currently imposed by securities regulators, for example, by extending these to private companies or providing for additional required disclosure, or will simply be redundant to existing provincial securities legislation.
The Budget also indicates that CBCA amendments will be proposed to modernize "director election processes and communications with shareholders." Again, the text of amendments has not been released, although they could address matters such as individual election of directors and majority voting policies, to which companies listed on the Toronto Stock Exchange are already subject.
The amendments will also "strengthen corporate transparency through an explicit ban on bearer instruments." The purpose of this amendment is not apparent, as the CBCA already provides that shares must be issued in registered form which precludes shares being in bearer form. It may be referring to debt instruments, such as promissory notes.
The Budget heading for this section indicates that the amendments will reduce the regulatory burden on Canadian businesses, although there is no explanation provided as to how the specified amendments would actually do so.
It is also not clear whether the amendments to the CBCA referred to in the Budget are the only amendments that will be proposed arising out of the CBCA consultation process.
Although the Budget indicates amendments to related statutes will be made to ensure alignment among federal laws and states the amendments will also be made to not-for-profit corporations and co-operatives legislation, no reference is made to such amendments being made to the analogous provisions in federal banks and insurance companies legislation.
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.
