In recent years, there have been several changes to board governance law in Canada. These changes have been designed to improve the accountability and transparency of boards of directors, and to strengthen the protection of shareholders’ interests.
Some of the key implications of these changes include:
- Increased board diversity: The Canada Business Corporations Act (CBCA) now requires public companies to have at least one woman and one person from a visible minority on their boards. This is intended to promote diversity of thought and experience on boards, and to make boards more representative of the communities they serve.
- More robust board committees: The CBCA now requires public companies to have audit, compensation, and risk management committees. These committees must be composed of independent directors, and they must have specific responsibilities for overseeing the company’s financial reporting, compensation practices, and risk management.
- Enhanced shareholder engagement: The CBCA now gives shareholders more opportunities to engage with boards of directors. For example, shareholders can now submit proposals for consideration at annual general meetings, and they can also request that the board hold a special meeting to discuss a particular issue.
- Stronger penalties for breaches of fiduciary duty: The CBCA has increased the penalties for breaches of fiduciary duty by directors. This is intended to deter directors from engaging in self-serving behavior and to protect the interests of shareholders.
These changes are likely to have a significant impact on board governance practices in Canada. Boards of directors will need to carefully consider these changes and make necessary adjustments to their governance structures and processes.
In addition to the changes to the CBCA, there have also been several voluntary changes to board governance practices in Canada. For example, many companies have adopted policies on board diversity and boardroom refreshment. Boards are also becoming more transparent about their governance practices and are communicating more regularly with shareholders.
Overall, the trend towards stronger board governance is likely to continue in Canada. This is a positive development for Canadian companies and their shareholders. Strong board governance can help to improve decision-making, reduce risk, and protect shareholder value.
This article is for informational purposes only and is not legal advice. Contact us today to discuss your specific situation.