CANADA Law and Practice Contributed by: Sarah Gingrich, Sean Stevens, Marie-Josée Neveu and Tracy Hooey, Fasken
1. Introductory 1.1 Forms of Corporate/Business Organisations
potential influence of Canadian institutional investors such as pension funds. Many of these investors have distinct expectations regarding various corporate governance matters, includ - ing as relates to such issues as diversity, equity and inclusion (DEI) and sustainability, and they can proactively exert pressure on their portfolio companies towards these ends. This pressure can sometimes be significant, including where institutional investors together hold a sizeable shareholding and because many Canadian pub - lic companies are not as widely-held as more often occurs in certain other jurisdictions. Overall, corporate governance in Canada con - tinues to evolve and is an area of acute interest among companies, investors, regulators and other market participants. 1.3 Corporate Governance Requirements for Companies With Publicly Traded Shares Publicly traded companies in Canada are sub - ject to various corporate governance rules and guidelines of both mandatory and volun - tary application. Mandatory requirements are imposed principally by the company’s govern - ing corporate statute (see 1.1 Forms of Corpo- rate/Business Organisations ) or by applicable securities laws. Voluntary requirements result principally from non-legal sources such as the expectations of institutional investors (eg, pen - sion funds; see 1.2 Sources of Corporate Gov- ernance Requirements ), proxy advisory firm recommendations, and contemporary industry best practices. Notwithstanding the 14 different corporations statutes (federal, provincial and territorial; see 1.1 Forms of Corporate/Business Organi- sations ) available in Canada, the majority of Canadian public companies are incorporated
The principal form of business organisation in Canada is the business corporation which affords shareholders limited liability protection, and Canada has 14 different business corpora - tions statutes under which these can be incor - porated. The Canada Business Corporations Act (CBCA) is Canada’s federal business corpora - tions statute. Each of Canada’s 13 provinces and three territories also has its own business corporations statute. However, these are gener - ally modelled on the CBCA such that, in most cases and subject to limited exceptions (such as director residency requirements), there is gen - erally little substantive difference among them practically speaking. Several provincial busi - ness corporations statutes in Canada provide for unlimited liability corporations, which may be advantageous as part of cross-border tax planning (but which do not necessarily provide shareholders the same extent of limited liability protections that business corporations do). 1.2 Sources of Corporate Governance Requirements The principal sources of corporate governance requirements in Canada are the business cor - porations statute under which the company is incorporated and, if the company is publicly listed in Canada, Canadian securities laws. Also, while not technically binding or obligatory, corporate governance practices in Canada can be significantly impacted by various non-legal sources such as proxy advisory firm recommen - dations and contemporary industry best prac - tices. A particularly notable non-legal source of cor - porate governance practice in Canada is the
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