Order Fixing August 31, 2022 as the Day on Which Certain Sections and Subsections of that Act Come into Force: SI/2022-17
Canada Gazette, Part II, Volume 156, Number 6
SI/2022-17 March 16, 2022
AN ACT TO AMEND THE CANADA BUSINESS CORPORATIONS ACT, THE CANADA COOPERATIVES ACT, THE CANADA NOT-FOR-PROFIT CORPORATIONS ACT AND THE COMPETITION ACT
Order Fixing August 31, 2022 as the Day on Which Certain Sections and Subsections of that Act Come into Force
P.C. 2022-200 March 3, 2022
Her Excellency the Governor General in Council, on the recommendation of the Minister of Industry, pursuant to subsections 108(1) to (3) and (6) of An Act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act and the Competition Act, chapter 8 of the Statutes of Canada, 2018, fixes August 31, 2022 as the day on which sections 3, 4, 13, 15, 32, 44, 45, 52 to 54, 56, 59, 60, 83 and 94, subsections 95(1) to (4), section 102, subsections 104(1) and (3) and section 106 of that Act come into force.
(This note is not part of the Order.)
Pursuant to subsections 108(1) to (3) and (6) of An Act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act and the Competition Act (the Amending Act), this Order in Council fixes August 31, 2022, as the day on which sections 3, 4, 13, 15, 32, 44, 45, 52 to 54, 56, 59, 60, 83 and 94, subsections 95(1) to (4), section 102, subsections 104(1) and (3) and section 106 of the Amending Act come into force.
The objective of this Order is to bring into force legislative amendments to the Canada Business Corporations Act (CBCA), the Canada Cooperatives Act (Coop Act), and the Canada Not-for-profit Corporations Act (NFP Act) related to the election of directors, the keeping and producing of documents by the Director, and corporate names.
The Amending Act received royal assent on May 1, 2018. It addressed various corporate governance issues, including inefficiencies in the current board election voting system and inconsistent practices with the retention of documents. While parts of the Amending Act have already come into force, other provisions require regulatory amendments to become operational. The detailed requirements in relation to the election of directors, document retention, and corporate names have been developed and prescribed in relevant regulations amended through the Regulations Amending Certain Regulations Administered by the Department of Industry. The provisions of the Amending Act can now be brought into force.
The legislative provisions will come into force on August 31, 2022. The associated regulatory amendments under the CBCA, the Coop Act and the NFP Act will come into force on the same day. This date was chosen to ensure that changes to the election process of directors, as detailed below, would minimally disrupt the election of directors at the annual shareholders’ meetings and also to provide sufficient time for the affected corporations to prepare and send its meeting materials in the required timeframes.
Once the provisions of the Amending Act and the amending regulations are in force, distributing corporations under the CBCA and distributing cooperatives under the Coop Act will be required to hold uncontested elections for directors according to the revised rules. These changes are expected to increase board accountability towards shareholders. The enhanced process would allow shareholders to influence boards more effectively and make boards more responsive and accountable to shareholders compared to the traditional voting approach. Changes to the process for the election of directors are not expected to impose significant additional burden on publicly traded corporations or public cooperatives, since many of these are already required by the Toronto Stock Exchange rules to hold annual and individual elections and to use a majority voting model.
The revised rules regarding document retention by the Director will result in more clarity and predictability for stakeholders around the availability of various documents submitted to or produced by the Director. This increased certainty around availability of documents would assist corporations in preparing for transactions such as opening bank accounts or preparing for litigation.
The provisions of the Amending Act being brought into force were reviewed through the parliamentary process. Innovation, Science and Economic Development Canada (ISED) has actively engaged with key stakeholders (for example associations, corporate lawyer representing distributing corporations, provincial security authorities) about the legislative and regulatory changes. ISED consulted stakeholders on proposed changes to the Amending Act and, where possible, addressed the issues raised. ISED has also continued to engage key stakeholders as well as the general public throughout the regulatory development process. A summary of the comments received are outlined in the Consultation section of the Regulatory Impact Analysis Statement for the amending regulations.
Senior Policy Manager
Innovation, Science and Economic Development Canada