CANADA Trends and Developments Contributed by: Bill Gilliland, Dentons
Introduction Corporate governance in Canada continues to evolve. Diversity continues to be a focus of regu - latory and proxy advisory policy change, and for boards, is a key component of ESG concerns. The adoption of majority voting in the Canada Business Corporations Act (CBCA) strengthens shareholders’ hands at shareholder meetings. The introduction of legislation governing disclo - sure of beneficial ownership of company shares, as well as certain other matters not previously subject to mandatory disclosure, are showing a trend towards increased transparency. Climate change is another core aspect of ESG concerns at the board level. Proposed climate-related dis - closure rules will entail very significant chang - es to corporate governance that will require boards of directors to undertake a comprehen - sive review of the corporation’s governance structures and practices. Changes continue to be made to corporate statutes to remove per - ceived technical burdens. Stakeholders will look for more oversight from the board as adoption of generative artificial intelligence (AI) continues to grow exponentially. Diversity – Boards and Senior Management Diversity on boards and in senior manage - ment is being reviewed by corporate regula - tors and stakeholders, and the legal and “soft law” requirements have and are continuing to evolve. Since 2014, Toronto Stock Exchange (TSX)-listed corporations have been required to make diversity-related disclosure in their annual disclosure documents on “comply or explain” basis, including: • on their policies and targets regarding the representation of women on the board of directors and in executive positions;
• how the representation of women is consid - ered in selecting board and executive officer candidates; • gender representation on the board and in executive officer positions; and • term limits. See National Instrument 58-101 of the Cana - dian Securities Administrators (CSA) Disclosure of Corporate Governance Practices (NI 58-101). Public corporations existing under the CBCA have been required to make diversity-related disclosure regarding women, indigenous peo - ples, persons with disabilities and members of visible minorities (designated groups) since 2020 on “comply or explain” basis. These require - ments include: • disclosure of term limits or other board renewal mechanisms, a description of written diversity policies for the selection of individu - als from designated groups as board nomi - nees and a description of progress made in achieving the policy objectives; • whether the level of representation of des - ignated groups on the board or in senior management is considered in appointing new candidates; • whether targets have been established for representation of designated groups on the board and in senior management, as well as progress towards those targets; and • the number of members of each of the des - ignated groups on the board and in senior management. Enhanced guidelines for making this disclosure were published by Corporations Canada in Feb - ruary 2022.
116 CHAMBERS.COM
Powered by FlippingBook