Private Member’s Bill 101
On March 7, 2017, Private Member’s Bill 101 had its first reading in the Legislative Assembly of Ontario. Bill 101, An Act to amend the Business Corporations Act with respect to meetings of shareholders, the election of directors and the adoption of an executive compensation policy, proposes amendments to the Ontario Business Corporations Act, including the following:
- A reduction in the required share ownership threshold from 5% to 3% for shareholders seeking to put forth director nominations to be included on the management proxy or requisition a shareholder meeting.
- Requiring the form of proxy to provide “for” and “against” options on the election of each individual director.
- Requiring a nominated director to receive a majority of the votes cast in order to be elected, even if the articles or by-laws of the corporation provide otherwise.
- For the election of directors, implementing mandatory voting for any shareholder voting in person at a meeting.
Bill C-25
The concept of majority voting, and allowing for an against vote on directors has also been proposed in Bill C-25, An Act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act and the Competition Act, presented in the Parliament of Canada by the Standing Committee on Industry, Science and Technology. Some in the industry have voiced concerns about the potential unintended consequences of the majority voting proposal, specifically, the process by which a director must resign if they do not receive the required majority, and the implications one or more immediate resignations may have on the company and their ability to conduct business.
What’s Next?
Bill 101 has been referred to the Standing Committee on Finance and Economic Affairs for the next stage of review, and Bill C-25 is currently awaiting third reading in the House of Commons. Computershare will continue to monitor these bills as they progress through the required channels.