Boards of directors in Canada have several legal obligations under the Canada Business Corporations Act (CBCA) and other securities laws. These obligations include:
- Acting in the best interests of the company and its shareholders.
- Disclosing material information to shareholders.
- Establishing and maintaining effective internal controls.
- Appointing and overseeing the performance of senior management.
Boards can ensure compliance with board governance law in Canada by taking the following steps:
- Develop a board governance policy. The board governance policy should set out the board’s commitment to good governance and its specific governance practices. The policy should be reviewed and updated on a regular basis.
- Adopt the Canadian Code of Corporate Governance (CCCG). The CCCG is a set of guidelines that recommends best practices for board governance in Canada. By adopting the CCCG, boards can demonstrate their commitment to good governance and help to mitigate their risk of legal liability.
- Establish board committees. The board should establish committees to oversee specific areas of the company’s business, such as audit, compensation, and risk management. This will help the board to delegate some of its responsibilities and focus on its most important strategic oversight role.
- Adopt clear and concise board meeting procedures. The board should have clear and concise board meeting procedures in place to ensure that meetings are conducted efficiently and effectively.
- Document board decisions. The board should document all of its decisions to ensure that there is a clear record of the board’s deliberations and actions.
- Review board performance on a regular basis. The board should review its own performance on a regular basis to identify areas where it can improve.
Boards can also seek advice from legal counsel and other experts to help them ensure compliance with board governance law. By taking these steps, boards can help to protect themselves from legal liability and demonstrate their commitment to good governance.
This article is for informational purposes only and is not legal advice. Contact us today to discuss your specific situation.