For annual shareholder meetings held after 1 Jan 2020, federal distributing corporations, including venture issuers, created under the Canada Business Corporations Act must disclose the diversity of their boards of directors and senior management. A recent order from the Governor General in Council sets the effective date for the diversity-disclosure mandate (Bill C-25) enacted in 2018. Regulations to implement the law appeared in the 10 Jul 2019 Canada Gazette.
According to the government, women make up 48% of the workforce but hold an estimated 14% of all Canadian board seats and approximately 22%-25% of the board seats in Financial Post 500 companies. The new disclosure rules aim to advance women and other designated groups on corporate boards.
Application. The new disclosure obligations will apply to all distributing corporations under the Canada Business Corporations Act, including venture corporations that are exempted under the provincial rules.
Designated groups. The diversity groups go beyond gender composition and are the same as under the Employment Equity Act — namely, women, aboriginal peoples, persons with disabilities and members of visible minorities. Corporations can include other groups, if desired. At present, most provinces already require companies to disclose the number of women on boards and in executive officer positions.
Senior management. Members of senior management include the corporation’s:
Information to disclose. Companies must disclose information on the following matters, or if they don’t have a process, practice or policy, explain why they don’t:
The diversity information should be sent at the same time in the annual meeting notice to shareholders and to Corporations Canada. A corporation may choose to include the diversity information in its proxy circular.