An Act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act and the Competition Act
Backgrounder
Marketplace framework laws set the ground rules for how Canadian businesses operate, so getting them right is of critical importance to the economy. The Canada Business Corporations Act (CBCA) and the Competition Act are framework laws of broad, general application that affect many Canadian businesses, shareholders, executives and consumers.
The CBCA sets out the legal and regulatory framework for nearly 270,000 federally incorporated corporations. While providing a flexible basic structure and standards for the direction and control of a corporation, the CBCA does not prescribe how a corporation is to be managed.
The CBCA's companion statutes, the Canada Cooperatives Act (Coops Act) and the Canada Not-for-profit Corporations Act (NFP Act), are modelled on the CBCA, providing a similar framework for cooperatives and not-for-profit corporations, respectively. The Competition Act is a law of general application, containing both criminal and civil provisions, aimed at preventing anti-competitive practices in the marketplace.
These laws seek to promote investor confidence and a competitive marketplace, which can in turn support long-term investment and contribute to economic growth. Those measures build on Canada's Innovation Agenda, including efforts to promote innovation and inclusive growth, and help all Canadians contribute to and share in the prosperity of the country. Modern and well-crafted economic framework laws are the foundation upon which Canadian companies can innovate and grow to scale in the modern economy.
The bill addresses these issues through targeted measures. The director election process will be modified to enhance shareholder democracy. Measures include CBCA corporations holding annual elections, individual votes for director candidates, and directors being elected by majority voting model when the number of candidates is the same as the number of positions to be filled.
The CBCA's requirements for paper-based communications will be replaced by a "notice and access" system, allowing corporations to use electronic communications to provide notice of meetings to shareholders and online access to relevant documents. The deadline for shareholders to submit proposals will also be simplified. Finally, amendments would clarify that all shares and share warrants must be in registered form, prohibiting the issuance and use of bearer shares.
Corresponding amendments will be made as necessary to the Coops Act and the NFP Act.
One of Canada's strengths is its diversity. To ensure that Canada remains competitive, all members of society need to participate in our marketplace. To support the representation of women on boards, distributing CBCA corporations will be required to identify the gender composition of their boards and senior management and to disclose their diversity policies or explain why none are in place.
The affiliation rules under the Competition Act will be updated such that they fully integrate all business models and recognize how firms operate in the modern marketplace. This will ensure that activities between affiliated entities do not unwittingly trigger investigations or merger reviews by the Competition Bureau.
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