Canada Business Corporations Act
Notice of intent to develop regulations for the disclosure of information associated with diversity on boards of directors and among senior management
Notice is hereby given that Innovation, Science and Economic Development Canada intends to amend the Canada Business Corporations Regulations, 2001.
Background
Diversity on boards of directors and among senior management continues to be an issue within Canada as well as in other countries. Despite the focus on increasing broad diversity in corporate leadership roles, gaps persist and more work needs to be done at both the board level and in senior management. While the focus has primarily been on gender, the issue of diversity is much broader. At minimum, it includes cultural background, place of origin, disability, or vocational background. Under-representation of different segments of our population is not only a question of fairness, it also affects the bottom line. Viewpoints from a variety of perspectives can lead to innovative thinking and better performance.
This package of regulatory amendments relates to diversity disclosure requirements as established by 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, which received Royal Assent on May 1, 2018. Bill C-25 stipulated that the prescribed information respecting diversity would be established by regulations.
In his appearance before Parliamentary committees, the Minister referenced the four designated groups under the Employment Equity Act, while recognizing that corporations could be more inclusive. The proposed regulations, that were available to Parliamentary committees and were publicly available on ISED's website shortly after Bill C-25 was tabled, prescribe those four designated groups.
The aim is to bring forward these regulations ahead of the other regulatory amendments associated with Bill C-25 and to have the provisions in force before the 2020 proxy season, the period during which many corporations hold their annual shareholders meetings. The other regulatory amendments required to bring the remaining provisions of Bill C-25 will be implemented soon thereafter.
Proposed approach
Bill C-25 requires certain corporations under the Canada Business Corporations Act to provide shareholders with information on the corporation's policies related to diversity on the board of directors and among senior management on a "comply or explain" basis. The regulatory amendments would specify that:
- the new obligations for disclosing this information would apply to all distributing corporations, including venture issuers;
- distributing corporations must either provide this information to shareholders with the notice advising them of the annual shareholders meeting or the management proxy circular that must be sent to shareholders for that meeting, or explain why it has no policy;
- for the purposes of reporting on diversity, distributing corporations would need to provide information on the specified groups set out and defined in the Employment Equity Act, namely:
- women
- Aboriginal peoples
- persons with disabilities, and
- members of visible minorities;
- for the specified groups of persons, distributing corporations will need to disclose the same type of information as required under provincial securities rules in Items 10 to 15 of Form 58-101F1 entitled Disclosure of Corporate Governance Practices, namely:
- whether the corporation has adopted term limits or other mechanisms of board renewal
- whether the corporation has a written policy relating to the identification and nomination of directors from these specified groups, and if so, describe the policy
- whether and, if so, how the board or nominating committee considers diversity on the board in identifying and nominating candidates for election or re-election to the board
- whether and, if so, how the corporation considers diversity when making senior management appointments
- whether there are targets for representation on the board and among senior management for the specified groups and, if so, progress in achieving the targets; and
- the number and proportion (in percentage terms) of directors from these specified groups on the board and in senior management; and
- "senior management" is defined to mean the same as "executive officers" as set out in subsection 1.1(1) of provincial securities rules National Instrument 51-102 entitled Continuous Disclosure Obligations and includes:
- a chair, vice-chair or president
- a vice-president in charge of a principal business unit, division or function, including sales, finance or production, and
- a person performing a policy-making function in respect of the corporation.
Timing
The intent is for these regulatory amendments to come into force on June 30, 2019, and for the requirements to be applied to information provided for annual meetings held on or after January 1, 2020.
Next steps
This Notice of Intent provides an opportunity for interested parties to submit comments on the regulatory approach set out above by mail or email before May 22, 2019. Comments received during this public comment period will be taken into consideration and will be summarized in the Regulatory Impact Analysis Statement to be published in the Canada Gazette, Part II. The statement will not contain any personal information that could be used to identify individual stakeholders, and those making submissions should ensure that they do not contain any confidential or personal information. Business contact information will be collected and may be used for future business consultations conducted by Innovation, Science and Economic Development Canada.
Contact
Innovation, Science and Economic Development Canada
Attention: Coleen Kirby
Manager, Policy Section, Corporations Canada
ic.corporationscanada.ic@ised-isde.gc.ca
Tel: 1-866-333-5556