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The Corporate Governance Review: Canada (Second Edition)

Author(s): Andrew MacDougall, Robert M. Yalden

May 2012

Canada’s system of corporate governance is derived from the British common law model and strongly influenced by developments in the United States. While corporate governance practices in the United Kingdom and the United States are similar in many respects, where there are differences Canadian practice usually falls somewhere in between. For example, a Canadian corporation is more likely than a US corporation to have a chair who is not the CEO and typically has fewer executives on the board than a UK corporation.

Corporate governance practices in Canada are shaped by legal rules and best practices promoted by institutional shareholder groups, the media and professional director associations such as the Institute of Corporate Directors (‘the ICD’). Sources of legal rules include provincial corporate statutes, securities laws and rules, stock exchange requirements and the common law, as well as a wide variety of other regulatory statutes, regulations and policies. The 10 provincial securities commissions are very active in corporate governance matters, often overlapping corporate law areas of concern.

Canadian corporate governance has also been influenced by the high proportion of public corporations in Canada that have a dominant or controlling shareholder, either through equity ownership or the ownership of multiple voting rights. Canadian institutional investors have a profound influence on Canadian corporate governance practices and Canada may be unique in that has a national institutional investor organisation formed to promote good governance practices in corporations whose shares members own. The Canadian Coalition for Good Governance (‘the CCGG’) comprises 48 members, including many of Canada’s largest institutional investors, collectively managing nearly C$2 trillion in assets, and has pursued an organised programme of articulating its views and encouraging best practices generally without resorting to proxy battles.

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Reproduced with permission from Law Business Research Ltd. This article was first published in The Corporate Governance Review, Second Edition (published in May 2012 – editor Willem J L Calkoen).