House of Commons Hansard #37 of the 37th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was trade.

Topics

Committees Of The House
Routine Proceedings

12:25 p.m.

Some hon. members

Agreed.

Committees Of The House
Routine Proceedings

12:25 p.m.

The Deputy Speaker

The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?

Committees Of The House
Routine Proceedings

12:25 p.m.

Some hon. members

Agreed.

(Motion agreed to)

The House resumed consideration of Bill C-8, an act to establish the Financial Consumer Agency of Canada and to amend certain Acts in relation to financial institutions, as reported (with amendments) from the committee, and of the motions in Group No. 3.

Financial Consumer Agency Of Canada Act
Government Orders

March 27th, 2001 / 12:25 p.m.

Bloc

Pauline Picard Drummond, QC

Mr. Speaker, there is something I did not really understand with the adoption of Motion 3. It would appear that you allowed something, but on this side we did not hear what you said.

Financial Consumer Agency Of Canada Act
Government Orders

12:25 p.m.

The Deputy Speaker

The hon. member for Saskatoon—Humboldt requested the unanimous consent of the House on some report and it was given. We are therefore resuming debate.

Financial Consumer Agency Of Canada Act
Government Orders

12:25 p.m.

Bloc

Pauline Picard Drummond, QC

As I said, our proposal dealt with limiting the number of boards on which a director can sit at the same time.

We were saying that, right now, what exists is the old boys' club rule where “I appoint you, you appoint me and we appoint one another”, which makes boards of directors increasingly less efficient and less representative of shareholders. We believe that the number of boards of directors on which a person is allowed to sit should be very limited, because one needs time and a minimum of dedication to do a good job. The bill completely ignores those recommendations.

Second, there is the elimination of potential conflicts of interests between board members and those who provide goods and services to the institution. Our proposal dealt with the elimination of potential conflicts of interests between board members and service providers.

Bill C-8 contains no provision to that effect, except the general provision on very general conflicts of interests. As we know, in the United States and even in Canada, there has been some success in getting shareholders meetings to pass, often against the will and recommendations of bank managers and other corporate directors, resolutions making it a requirement to disclose at least the fees paid to external auditors for audit services, on the one hand, and general consulting services, on the other hand.

For example, a consultant who is paid $1 million to audit records, while at the same time being paid $10 million for various consulting services could presumably have some difficulty presenting a critical internal audit report. Everyone understands that.

Third, there is the requirement to submit financial statements for review and discussion during the annual shareholders' meeting. That proposal seeks to clarify the legislation so that the agenda of the yearly shareholders' meetings include the item “consideration of financial statements and auditor's report”.

In that regard, according to the Canadian Oxford Dictionary , the word consideration means more than just tabling, but the act of considering and careful thought means not just tabling, but giving careful thought.

Since the financial statements are the main report of the agents on their management of the corporation, consideration and discussion of that document is a basic right of the principal shareholders, even those of banks.

There is also the presentation of the officers' remuneration policy to the shareholders' approval. With respect to banks, which are essentially public service companies operating in a very protected environment compared to other companies in the private sector, we find the remunerationpaid to officers literally outrageous.

Of course we know the process through which they receive very positive recommendations about remuneration systems providing they are paid this or that amount. Nevertheless, the end result is that the officers of these institutions are not necessarily paid a basic salary, but aggregate remuneration with a very generous option plan, and that is unacceptable.

As for the adoption of a code of procedure respecting the conduct of shareholders' meetings, the purpose of this proposal is to facilitate active and effective shareholder participation in meetings and to protect them from the arbitrary decisions of presiding officers who are anxious to cut short shareholders' remarks. Our suggestion is that each corporation prepare a code of procedure respecting the conduct of these meetings and that this procedure be adopted at an annual meeting of shareholders within a reasonable timeframe.

Some banks, and more particularly the Laurentian Bank, have voluntarily adopted such a code, but it is not a requirement of the bill.

Corporations should also be required to prepare a comprehensive report on all shareholders' meetings and send it to all shareholders. Our recommendation is that corporations be required to do so. Some of them already do, but there is no requirement to that effect in the bill.

Another suggestion is to reduce the barriers that prevent shareholders from making proposals before and during shareholders' meetings. This suggestion is being made generally rather than by the board or the management of banks exclusively. At this time, a shareholder must hold 5% of the shares of a financial institution or public corporation or have control to be entitled to present candidates as directors on the board.

Do members know how much 5% of the Royal Bank shares represents? It represents $900 million. I do not think any members has that much money or has the proposed control of a bank to be able to present candidates. I do not know too many people with that kind of money.

Financial Consumer Agency Of Canada Act
Government Orders

12:35 p.m.

An hon. member

Paul Martin.

Financial Consumer Agency Of Canada Act
Government Orders

12:35 p.m.

Bloc

Pauline Picard Drummond, QC

Of course. Access should be given to all bona fide shareholders: most shares are held in trust by brokers, and these intermediaries are the registered shareholders. Only these intermediaries hold the list of actual shareholders, so the corporation does not know who these shareholders are and cannot communicate directly with non registered shareholders. This would ease communication between the corporation and its shareholders.

The position of chairman should be separate from the position of chief executive officer. We are also proposing a reduction of barriers to the shareholders' right to submit proposals for and during shareholders' meetings. Thus, we recommend a reduction of barriers to the shareholders' right to submit proposals.

At this time, the act and the bill provide that the bank's management may refuse a shareholder's proposal that is primarily for the purpose of promoting general economic, political, racial, religious, social or similar causes. It may essentially refuse almost anything and it is only public pressure, so to speak, that forces banks to accept shareholders' proposals.

Our proposal also deals with branch closures. We are told that banks will now be able to proceed with branch closures. We would like this to be very transparent. People, especially those living in rural and isolated areas where there are less services will be given a six month notice. How lucky; a six month notice to warn them that their bank will be closed. And who cares about where they will get the same services.

There is nothing in the bill on this. There is only the minister who is convinced that his bill will help ordinary people, small investors and small savers. I hope these flaws will be corrected in the bill before it is passed.

Financial Consumer Agency Of Canada Act
Government Orders

12:35 p.m.

The Deputy Speaker

Is the House ready for the question?

Financial Consumer Agency Of Canada Act
Government Orders

12:35 p.m.

Some hon. members

Question.

Financial Consumer Agency Of Canada Act
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12:40 p.m.

The Deputy Speaker

The question is on Motion No. 3. Is it the pleasure of the House to adopt the motion?

Financial Consumer Agency Of Canada Act
Government Orders

12:40 p.m.

Some hon. members

Agreed.

Financial Consumer Agency Of Canada Act
Government Orders

12:40 p.m.

Some hon. members

No.

Financial Consumer Agency Of Canada Act
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12:40 p.m.

The Deputy Speaker

All those in favour of the motion will please say yea.