Written By Gary S.A. Solway, James T. McClary and Bradley M. Eidsness
Public corporations incorporated under the Canada Business Corporations Act (CBCA) will soon be required to report the diversity of their directors and senior management.
Effective January 1, 2020, public CBCA corporations must disclose:
- if they have adopted policies on the identification and nomination of "designated groups", and details of such adopted policies, including assessments of progress.
"Designated groups" are:
- Aboriginal peoples;
- persons with disabilities; and
- members of visible minorities;
- whether the board or nominating committee considers the level of representation of designated groups on the board and in senior management, and whether it has adopted targets for each designated group;
- the percentage of each designated group on the board and in senior management1, including in its major subsidiaries2;
- any adopted board term limits or other mechanisms of board renewal, or reasons why it has not adopted such limits or mechanisms; and
- if it has not taken any action in adopting policies or targets, or does not consider diversity with respect to the designated groups, it must disclose why it has not done so.
These disclosure requirements will come into force prior to the 2020 proxy season when many public corporations hold their annual shareholders meetings.3
- Senior management positions captured include the chair and vice-chair of the board of directors, chief executive officer, chief financial officer, president, vice-president in charge of a principal business unit (including sales, finance or production), and individuals performing policy-making functions.
- Major subsidiaries are those whose assets and revenues are consolidated into the parent's financial statements and account for 30% or more of the consolidated assets or revenues.
- These disclosure requirements were added to the Canada Business Corporation Regulations, 2001 (the "Regulations"), by the Regulations Amending the Canada Business Corporation Regulations, 2001, SOR/2019-258, which were published in the Canada Gazette, Part II on July 10, 2019. The amendment to the Regulations follows the Royal Assent of 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, May 1, 2018, which introduced amendments in respect of director elections, board and senior management diversity disclosure, and shareholder communications for public corporations incorporated under the CBCA (see New Rules for CBCA Companies). Further amendments addressing the other amendments to Bill C-25 are expected to be introduced in the near future.