Changes to the Canada Business Corporations Act designed to make certain enterprises more accountable for diversity in corporate leadership get a thumbs-up from a number of CBA groups.
The Canadian Corporate Counsel Association, the Women Lawyers Forum, the Business, Charities and Not-for-Profit and Competition sections and the Equality Committee collaborated on a submission responding to Bill C-25, which proposes amendments to the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-Profit Corporations Act and the Competition Act.
The groups limited their comments to the parts of the bill dealing with the CBCA and the Competition Act, and within those two Acts addressed only certain provisions.
The amendments in Bill C-25 and draft regulations dealing with diversity would require publicly traded corporations to disclose information on the diversity amongst their directors and in senior management. The measures mirror those already required by all provincial and territorial regulators except in British Columbia and Prince Edward Island, and are a good “first step,” the CBA Sections say.
“We recommend a flexible, principled approach to achieving both diversity and board renewal, which will allow distributing corporations to adopt strategies that meet their unique business realities while avoiding conflicts with other regulatory requirements,” the submission says. “A comply-or-explain model, that takes a multipronged approach by providing the framework, tools and support required to address barriers to diversity would, in our view, be appropriate to meet both objectives.”
The CBA Sections would like to see a “robust” definition of diversity added to the bill, which does not currently offer a definition at all, while proposed regulation 10 recognizes gender diversity and a vague category of diversity other than gender. Further on the topic of clarity, the submission says it’s important that the type of information required to be disclosed about the corporation’s diversity activities, in terms of gender and factors other than gender, should be standardized for consistency.
For transparency’s sake, the CBA Sections recommend publishing board composition and the content of diversity disclosures on the Corporations Canada website.
For the other issues raised in the submission, the CBA Sections make frequent reference to the 2014 CBA submission recommending changes in the CBCA.
- Bearer certificates – Bill C-25 would “prohibit the issuance of bearer certificates, warrants or other evidence of a conversion privilege, option or right to acquire shares,” which the CBA Sections say is inconsistent with other Canadian business corporation acts. Furthermore, the 2014 submission recommended maintaining the provisions in the CBCA on nominee shareholders, which is inconsistent with prohibiting bearer shares. The current rules, the 2017 submission says, are adequate protection.
- Security transfers – The CBCA’s security transfer provisions are duplicative and should be removed, as newer, more modern uniform security transfer legislation in each province better covers the issues.
- French definition of a business combination – The current wording should be retained.
- Shareholder communication – The CBA Sections continue to recommend that electronic communications with shareholders be allowed for private corporations.
- Financial disclosure – The CBA Sections recommend that the current clear language in sections 155 and 159 be retained.
- Dissolution – Proposed amendments to section 209, which would replace the words “body corporate” with “the dissolved corporation or other body corporate” are unnecessary.
In the Competition Act, the CBA Sections recommend that subsection 109(1) of Bill C-25 be clarified to “make clear that ‘trust’ refers to the trust assets and businesses held by the trustee on behalf of the beneficiaries of the trust, and that ‘trust’ does not include the trustee or the beneficiaries of the trust.
As well, proposed changes to subsection 110(4) – which would extend the application of the amalgamation provision to “entities” – are unnecessary because in Canada the concept of amalgamation applies only to corporations.