Federal Budget 2015: cooperative regulator and board diversity among Government of Canada's priorities

April 29, 2015

Presented on April 21 by Finance Minister Joe Oliver, Canada’s 2015 Federal Budget includes two commitments of special interest to public companies. These relate, respectively, to the proposed Cooperative Capital Markets Regulatory System and to corporate governance modernization, notably in the area of board diversity.

The Cooperative Regulator: Draft Legislation and Regulation Coming Soon

With respect to the Cooperative Capital Markets Regulatory System, the Government of Canada committed to move ahead in consultation with the participating provinces and territories (currently British Columbia, New Brunswick, Ontario, Prince Edward Island, Saskatchewan and Yukon). Mr. Oliver noted that progress has already been made on the legislative framework and on harmonized rules and referred to several developments that are expected over the summer of 2015, including:

  • The release of updated draft capital markets legislation and regulations, for public comment; and
  • The appointment of the Capital Markets Regulatory Authority’s initial board of directors.

The Budget speech reiterated what the Government has identified as the advantages of the cooperative system, including responsiveness, expertise, consistency and complementary federal legislation on criminal and systemic risk issues.

See pages 254-255 of the 2015 Federal Budget for more information, as well as our prior posts on aspects of the Cooperative Regulator, including its infrastructure, the proposed provincial capital markets legislation and the impact of that legislation on derivatives markets.

CBCA Corporate Governance Amendments

In the Budget, the Government announced its intention to amend the Canada Business Corporations Act to implement a “comply or explain” disclosure model for board gender diversity. Such a standard is already in place for TSX-listed companies and has also been recognized by most provincial securities regulators.

In addition to board diversity, the Government plans further CBCA amendments to modernize director election processes and communications with shareholders. In an effort to promote corporate transparency, bearer instruments will be banned. Parallel amendments will be introduced in federal legislation governing co-operatives and not-for-profits.

See page 140 of the 2015 Federal Budget for more information. Subjects of prior posts that may be of interest include board diversity from the perspective of CSA disclosure requirements, the CBCA consultation paper and the OSC’s diversity amendments.

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