T+2 Settlement
The Canadian Securities industry is still on schedule to move from a Trade +3 (T+3) to T+2 settlement cycle on September 5, 2017.
The Canadian Capital Markets Association (CCMA) continues to publish updates and newsletters on their website at ccma-acmc.ca/en.
OBCA Proposed Changes
In the fall of 2016, the Business Law Advisory Council (the Council), which was established by the Government of Ontario earlier in the year, released a report to the Minister of Government and Consumer Services, recommending changes to the Ontario Business Corporations Act (OBCA), the Personal Property Security Act, Repair and Storage Liens Act, and the Arthur Wishart Act (Franchise Disclosure).
Some of the Council’s proposed changes to the OBCA include:
- Elimination of the current director residency requirements;
- Allowing shareholders to resubmit a proposal each year, if certain levels of support are received in past years;
- Including a time period in the corporation’s by-laws for shareholders of a non-offering corporation to submit a proposal.
The Council also commented on certain proposed changes to the OBCA that were already under review, and included in Bill 27, Burden Reduction Act, 2016. These include amendments to:
- Quorum requirements at shareholder meetings;
- The location of director meetings;
- Quorum requirements at director meetings;
- The maintenance of e-mail addresses on the security register.
CBCA Proposed Changes
There are currently two bills under review by the Canadian Government:
Bill C-25 – An Act to amend the Canada Business Corporations Act (CBCA), the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act and the Competition Act.
Some of the proposed changes to the CBCA and its regulations include:
- Requiring individual voting for directors;
- Requiring directors to receive a majority of votes;
- Providing an option to vote against a director instead of a withhold;
- Notice and Access: Amending the exemption for issuers wishing to use Notice and Access. Currently the exemption is only applicable to the mailing of information circulars to registered shareholders. The amendments would allow for the full use of Notice and Access by CBCA incorporated issuers. This includes the requirement to send Annual Financial statements, as well as the obligation of intermediaries to send proxy material to beneficial holders.
- For issuers who do not use Notice and Access, they will only be required to mail Annual Financial statements to those registered holders who have specifically requested them. This is the opposite of the current regime, where the requirement is to mail to all registered holders, except those who have specifically requested that they do not want to receive them.
- Requiring additional disclosure from issuers about diversity among directors and senior management.
Bill S-207: An Act to modernize the composition of the boards of directors of certain corporations, financial institutions and parent Crown corporations, and in particular to ensure the balanced representation of women and men on those boards.
Some of the proposed changes to the Canada Business Corporations Act (CBCA), Bank Act, Insurance Act, and Trust and Loan Companies Act include:
- Requiring the proportion of directors of each sex to be not less than 40%. If the board has less than eight members, the difference between the number of directors of each sex may not be greater than two.
- Providing an option to vote against a director instead of a withhold;
- Requiring directors to receive a majority of votes.
Board Diversity
On December 31, 2016, amendments to National Instrument 58-101 Disclosure of Corporate Governance Practices and (NI 58-101) came into effect in Alberta. These amendments were previously adopted in all jurisdictions in Canada, except for Alberta, British Columbia, and Prince Edward Island effective December 31, 2014.
The Canadian Securities Administrator is publishing annual reviews of compliance with NI 58-101. CSA Multilateral Staff Notice 58-307 was released in September 2015, and CSA Multilateral Staff Notice 58-308 was released in September 2016.