Andrew MacDougall
Nov 2, 2016
The federal government recently introduced Bill C-25 to amend and modernize the Canada Business Corporations Act. In an article for Law Times, writer Alex Robinson discusses the potential implications of the proposed amendments with legal practitioners, including Andrew MacDougall, a partner in Osler’s Corporate Practice Group.
According to the article, some corporate lawyers have expressed concerns that variances between the proposed legislation and the requirements of the Toronto Stock Exchange could cause confusion for some companies, especially regarding differing rules that deal with the same matters.
The article points out that Bill C-25, if passed, would require boards of directors to be elected by a majority voting system in uncontested elections and allow shareholders to vote against a director. This means that directors who do not receive a majority of “for votes” would not be elected. Andrew tells Law Times that the proposed requirements “could cause ‘failed elections’ in which shareholders fail to elect enough directors to act.”
“You could have a situation where you don’t have enough directors that have been elected to satisfy quorum requirements or the residency requirements or the minimum number of independent director requirements under corporate and securities laws and, therefore, the board is unable to act,” says Andrew, who adds that under the present system “the board acts as a ‘safety valve’ against that risk.”
Andrew also comments on the amendments’ requirements regarding diversity disclosure. The article reports that the amendments would require boards to provide their diversity representation and policies as well as submit annual diversity disclosure about the background of the directors and senior management to shareholders. According to Andrew, these requirements match those of securities laws of most Canadian jurisdictions and “it remains to be seen whether the regulations will require the same level of disclosure as the existing requirements.”
To learn more about the potential implications of the proposed amendments, read Alex Robinson’s full article “Confusion for companies result of bill?” in Law Times.