58 LEXPERT MAGAZINE
|
MARCH 2017
| IN-HOUSE ADVISOR: CORPORATE GOVERNANCE |
e amendments proposed in Bill C-25
stem from a House of Commons commit-
tee's statutory review in 2010, which was
followed, four years later, by a public con-
sultation by Industry Canada. e CBCA
amendments, which have passed second
reading in the Commons and are now
awaiting review by the Standing Commit-
tee on Industry, Science and Technology,
would apply only to federally incorporated
companies, not to companies incorporated
under provincial statutes.
e CBCA amendments "are a mod-
ern and progressive approach," says Susan
Marsh, General Counsel at Morneau She-
pell Inc. (which is provincially incorporat-
ed). "It's already entrenched in the policies
and practices in the [Toronto Stock Ex-
change] rules and the securities laws, which
Morneau Shepell follows. [e federal gov-
ernment] is essentially getting up to speed
on what current practices and policies are."
Phil Mohtadi, General Counsel at Sears
Canada Inc. (CBCA-incorporated), agrees.
"I don't think it's going to have a significant
impact on Sears. It doesn't fundamentally
change our corporate governance practices.
"at's because several of the changes in
the Bill are already reflected in the rules of
the [TSX], in particular the requirement
for annual board elections, voting on an
individual basis for directors rather than
as a slate, and the majority voting require-
ment. ose are significant changes to the
CBCA, but they're already reflected in the
rules of the TSX. Majority policy has been
a policy of the company for several years."
However, David Reid, a partner at DLA
Piper (Canada) LLP in Vancouver, is less
satisfied. "It's one thing to have it as an ad-
visory or a 'should comply with,'" he says,
"but the CBCA will be the only regime in
North America that makes these practices
an absolute. I'm concerned that it's remov-
ing effectively the board's discretion in
terms of its fiduciary duties."
Annual Board Elections
e C-25 amendments would require an-
nual elections of directors for CBCA cor-
porations. Currently, the CBCA requires
that an election of directors be held at least
once every three years, thereby permitting
staggered boards.
e amendments would require "dis-
tributing corporations" (essentially, re-
porting issuers or public companies) that
were incorporated under the CBCA to
hold elections of the full board of directors
annually. Corporations that are not "dis-
tributing corporations" under the CBCA
(essentially, private companies) could con-
tinue to hold elections of directors as infre-
quently as every three years.
Although most CBCA corporations al-
ready hold annual director elections, the
C-25 amendments would codify this re-
quirement for public companies and align
SUSAN MARSH
>
MORNEAU SHEPELL
It's already entrenched
in the policies and practices
in the [Toronto Stock
Exchange] rules and the
securities laws, which
Morneau Shepell follows.
[The federal government]
is essentially getting up
to speed on what current
practices and policies are.
ILLUSTRATION
BY
SÉBASTIEN
THIBAULT
