Bill C-25 (Historical)

An Act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act, and the Competition Act

Part 1 amends the Canada Business Corporations Act, the Canada Cooperatives Act and the Canada Not-for-profit Corporations Act to, among other things,
(a) reform some aspects of the process for electing directors of certain corporations and cooperatives;
(b) modernize communications between corporations or cooperatives and their shareholders or members;
(c) clarify that corporations and cooperatives are prohibited from issuing share certificates and warrants, in bearer form; and
(d) require certain corporations to place before the shareholders, at every annual meeting, information respecting diversity among directors and the members of senior management.
Part 2 amends the Competition Act to expand the concept of affiliation to a broader range of business organizations.

Canada Business Corporations Act

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Madam Speaker, I will close by saying that the amendments proposed in Bill C-25 will set the stage for a modern economy and a renewed commitment to innovation.

I look forward to seeing this bill become law.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Madam Speaker, my mistake. Thank you for the clarification.

Bill C-25 ensures that we create the right conditions to keep Canada at the forefront of a global economy. It will provide a transparent and predictable business environment for firms to innovate and grow.

Bill C-25 makes a number of modernizing adjustments. First, it will require publicly traded corporations to disclose to their shareholders the composition of their boards and senior-management ranks.

The measures in Bill C-25 call on corporations to tell their shareholders how they are promoting diversity at the senior-leadership level. Under representation of certain groups in society is not only a question of fairness. It can also affect the bottom line. This disclosure facilitates a frank conversation between corporations and their shareholders.

I am particularly proud to be speaking about this bill during Women’s History Month. It is a time when we celebrate the women who have shaped Canada’s history. We honour their courage, sacrifice and leadership in all spheres of life.

With this bill, our government is committed to addressing the under-representation of women and other groups in the highest levels of corporate leadership. This bill encourages corporations to reflect on whether they are drawing from the largest talent pool available to improve their performance.

This government is committed to inclusive growth. We have made our views on diversity very clear. We have already achieved gender parity in cabinet.

We also announced changes to the process for Governor in Council appointments. These changes ensure that diversity is a critical factor in selecting those who lead our public sector corporations and boards.

Bill C-25 builds on those initiatives. The bill recognizes that embracing diversity should be adopted as a good practice in corporate governance. We are not alone. We have already seen a similar commitment by other governments. Securities regulators and the private sector have also worked to increase diversity on corporate boards and within executive ranks.

Most securities regulators have adopted “comply or explain” rules that require publicly traded corporations to disclose gender composition and diversity policies for their executive ranks. Some private sector and non-profit organizations have adopted diversity policies or voluntary targets to increase women’s participation on corporate boards. We commend their efforts.

To improve shareholder democracy, Bill C-25 will also reform the process of electing corporate directors. It will introduce a majority-voting model when elections are uncontested. In our current system, a candidate can be elected even when there is only a single vote in favour, and all others were withheld.

If the proposed amendments are passed by the House, in an uncontested election, a candidate can only be elected if they have the majority of votes cast in their favour. This practice gives shareholders the right to vote against a candidate instead of simply withholding their vote.

Bill C-25 will also require publicly traded corporations to hold annual elections for corporate directors. It will also ensure that shareholders can vote for individual candidates rather than a group of candidates.

These reforms support diversity, shareholder democracy, and corporate performance. They allow shareholders to consider individual candidates on a more frequent basis. As a result, there are opportunities for deeper reflection on what diverse skill sets and experiences are best suited to govern a corporation.

Bill C-25 will also permit shareholders to access corporate materials online. This amendment will bring market framework laws into the digital age. It will increase business efficiency and reduce operational costs, while aligning with provincial securities rules. This amendment will also increase transparency and shareholder democracy.

Another amendment contained in the bill is an update to the Competition Act. This amendment ensures that our laws keep pace with contemporary ways that corporations structure themselves. Specifically, the bill takes into account how corporate affiliates are recognized under the act. The amendments do away with the risk that affiliates would be mistaken as competitors in the eyes of the law.

Making the law clear and neutral on this point eliminates business uncertainty. It also avoids the unnecessary time and resources that are currently spent on ensuring that companies comply with the law.

Madam Speaker, I would just like to clarify something. May I speak longer than my 10 minutes when I am sharing my time?

[Greg Fergus, Liberal, Parliamentary Secretary to the Minister of Innovation]

Madam Speaker, I appreciate this opportunity to rise in support of 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.

Our government is committed to growing the economy, creating jobs, and strengthening the middle class. As such, we are building the right foundation for an inclusive and innovative Canada. We want to foster new thinking by harnessing the full talents and experience of all Canadians.

We recognize diversity as a strength. Bill C-25 ensures that we create the right conditions to keep Canada at the forefront of a global economy.

Madam Speaker, I apologize for forgetting to ask for your permission and the approval of the House to share my time with the Minister of Status of Women, the member for Thunder Bay—Superior North. I hope to get your approval.

[Brian Masse, NDP, Windsor West, ON]

Madam Speaker, I am here to speak to something that is very important and it is good that this Parliament is bringing this forward. I think Bill C-25 is a positive initiative.

The minister mentioned the Marrakesh Treaty. That was a treaty that Canada signed onto through a bill passed here, which was important for the blind and for other Canadians, for larger print. It is one of the indications that we can actually move things through the House of Commons and we can have things done for Canadians.

The bill is movement in the right direction. As New Democrats, we are going to support it, for sure. There is no way that we would not support the initiatives of the bill, but there are some shortcomings with the current proposal. We will point out a couple of those, but we want to hear testimony from witnesses as well.

Bill C-25 is an act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act, and the Competition Act. Essentially what we are talking about is boards of governance in general, when we put the three core elements together. It is an opportunity to update and to include modern changes that are reflective. On the private sector model with the private corporations, blue chip corporations, and others, they have been very derelict, quite frankly, across the world in not having more of an inclusive nature. This is why it has come to the forefront, not just in Canada but across the world.

When we look at Europe and even at the United States, Canada has become known as a laggard with regard to this and there is no doubt about it. When the Conservatives talk about this getting through, after the 10 years it took them to bring something forward, right now we are happy to do so. Unfortunately, we are getting into a bragging competition between the Liberals and the Conservatives about this. However, I wonder why the bill is being launched again, another year and a bit later, basically the same as what it was before, especially given what we have seen with the more fundamental changes that are taking place in Germany and other places, which I will get into later, that are very important.

We are here today to at least take that first step forward in this process. To be clear, the most recent change to the measures in the bill was in 2001. That was just prior to my time here. It was under Jean Chrétien's government at that time, and prior to that it was decades before. We are really looking at nearly 40 years of letting them have the whole show so to speak. Right now, and this is how far things have come along and how difficult it still is, we require a legislative arm on this because still the right thing is not being done. Our corporate boards and tables across this country, where decisions are made about employees and about Canadians, do not even reflect anywhere near the diversity they should, and that is a shame. It is a shame that we have had to come this far.

Hence, one of the amendments that the New Democrats will be bringing forth is to have some type of a review of this process in the legislation. There will be a good debate. I know some civil society organizations and some governance organizations, especially related to the advocacy of women, have questioned the voluntary element in this initiative and said that there should be some monitoring of that.

The one way we can do it, and it is a very respectful way, is to make sure we have this coming back to Parliament so that we and Canadians have a voice to ask why a company is not complying and being reflective to some degree of the Canadian people, or at least coming to the benchmarks, generally speaking, that reflect our society. There are those people historically who have popped through the different barriers that take place. However, I have a concern because of the thoughts we have had in the past related to boards. They were referred to as the “old boys' club”, and that is very real.

It is also an indication that not only is this an issue of gender, ethnicity, and diversity, but also of social class. We have people who are basically disavowed and ruled unable, unequal, or unworthy of rising through the ranks. They have to go through exceptional circumstances to break those barriers, and they have been some of the most ingenuous people we have had. However, the time and day has come when everyone should count on who they are, what they think, what they do, and how hard they work, versus whom they know or who their family are, or at the very least, what their gender is.

We need to make sure that a number of things will be looked at here. These are very important.

The bill would have annual elections for directors. Right now, it can take up to three years for a director to be looked at. An annual director position can set the course on how a corporation responds to its shareholders.

If we believe in the essence of capitalism at face value, the argument there is that the shareholder is a voter and that in a democracy there are voting rights as a shareholder for the board and the CEO who controls it at that time. However, the current situation is that those meetings are not held, and if there is not that connection between the board and the shareholders, accountability can be avoided. Accountability can also be avoided by not publicizing meetings, or by not making sure that there is enough time in advance so that people can attend the meetings. Therefore, barriers can be created, similar to what I would call “non-tariff barriers”. When we are trying to sell products in another country, we cannot do so, because the non-tariff barriers or rules are so bad. It is the same with shareholders.

When we talk about shareholders, we are talking about ourselves. They are people who have invested their pensions or earnings. They buy those shares and the company gives them that equity in it, but if they cannot have any direct control whatsoever in terms of voting, because the CEO does not have the proper rules in place or has not been following them for up to three years. Then it becomes a problem. Therefore, the bill would require an annual meeting, which we are very supportive of.

Also, there is the structure of the old boy's club that was there regarding the election of directors as individuals. They used to run slates in the old boy's club, so to speak, making it more difficult for some other individuals who were trying to advance because the old boy's club was grouped against them. We would call that bullying today, but the reality is that we had a number of people who could not get through because the fix was in, so to speak, and the slate was developed. Now, with individual votes for those board members, at least there will be an individual case to made for each person.

I think that is the right way to do it, because, for example, some slates carried baggage where one could basically say, “I like three of the four, and I can live with them”. They would come out with a number of different things, as opposed to giving the right and basically saying that a single selection should be the way to go. I think that is going to be a good advancement.

On the issue of comply or explain, I noted that different countries have done different things. However, comply or explain is a way to bring the numbers up, and the current 18% or less share of women on boards is obviously not reflective of our society. With women making up over 50% of the population, but occupying less than 18% of board positions, it is an obvious problem that has to be fixed.

In surveys we have found that when comply or explain was used in the past in other countries and there have not been improvements in these numbers as a result, they have argued that not enough qualified people applied. That is the ceiling that is created. It is hard to challenge that, because we cannot have access to the confidential documents and information about who applied, who got left behind, and a number of different personal things that are very complicated, and so the target does not move at all. That is one of the reasons Chancellor Merkel in Germany moved legislation on this and now has a target of 30%.

Germany was simply fed up and said that for CEOs and blue-chip corporations the rate would be 30% and that they would have some time to bring that in. The time was shortened because they would need some time to comply or explain. For German not-for-profit boards and others, the rate is going to be 50%. There is a difference between 30% and 50%.

I was not privy to the debate and have not looked at what has taken place in the German legislation, but I am sure it will come out in testimony. Not-for-profit boards are found in hospitals, public institutions, and so forth. On those boards, of course, the rate should be 50% because taxpayers pay for those boards, and with 50% of our population being women they are directly paying 50%. We know that to be a fact. They need to have the same representation. In fact, they deserve to have the same representation. It is an absolute shame if they do not. This can be easily corrected. If women are supposed to be equal, then they deserve an equal voice in running those boards. We New Democrats are arguing for at least a review of this.

This goes back to what we are proposing in terms of an amendment, so that people at the very least are made aware of this. There might be others who do more on comply or explain. There could be a better amendment, and New Democrats are open to that. However, we are not going to give a blank cheque to this piece of legislation. There is no way we are going to let this legislation go through without fighting tooth and nail to the end, without adding accountability to change the current situation. We will not let that happen. We have not come this far on so many other measures, and we still have much further to go, that we would basically put up our hands on the bill and say good luck, we will leave it to the other guys, and we will see everyone later. We are not going to do that. We have done that enough. I have seen that happen too often here in the chamber, most recently with another bill that looked at gender parity with respect to electoral reform, and it was turned down in the House. Sadly, it was another lost opportunity.

This cannot be another lost opportunity. This cannot go back in the record books for another 40 years without any action taking place. That is why I am particularly interested in the German case. Germany has gone through it and has changed.

We do know that the provinces have moved on this as well, and it will be interesting to hear the testimony at committee. They have moved on comply or explain and a few other things. We will be getting some of the results from them as well. I will be interested in hearing what is going on out there in committee. That will also give us a better sense of things.

Maybe we are wrong in the sense that corporations and not-for-profits will act quickly on this. I worked in a not-for-profit industry for a number of years and was successful in bringing in this model. Not-for-profits will comply and move toward that. This is our opportunity to bring it to Parliament and to Canada as a whole. We can find out if those who are laggards have a problem with it and how they are going to fix the problem. That is what we are going to see with this legislation. Hopefully we will see amendments that would make this happen, because we are just not going to leave it alone.

Another missed opportunity with respect to this issue is corporate CEO compensation. We are calling for more shareholders and investors to have a say on CEO pay. We are interested in looking at executive compensation as it is a part of the package. We have seen in Canada and around the world CEOs getting big bonuses while companies tank, and fire their workers left, right, and centre at the same time. We have to look no further than the CEOs at our banks. Their compensation was increasing at a time when banks were having some problems and we had to backstop some of them. The banks had record profits and their CEOs received increased compensation. During the last financial crisis, the average increase in their compensation was about 19%.

How is it that so many Canadians and so many small businesses are going through this problem that we have had. The challenges and the insecurity and the services they are supposed to get are challenged; government, which is funding this, is going into massive debt; and CEOs get almost 20%. Those banks have some the highest credit card costs not only in Canada but across the world. When it comes to credit card service fees, just talk to small merchants. Look at what is happening in Australia. Australia has a 0.5% cap and it is reviewing this and lowering it because banks are still making lots of money. It is bad for small business.

Here our small business people struggle when they go to the banks to get loans, and if they can get them, they are at high interest rates. Or public institutions like the BDC, or credit unions, have stepped in on riskier loans. What do the banks do in response? They fire more workers, close more branches, and they increase service fees. They do all of those things and the Conservatives set up what is basically a voluntary system for credit cards. It is like playing hockey and getting a penalty for cross-checking someone, but it is a voluntary penalty and if players want to go in the penalty box they can time themselves out if they want to. If they do not, that is okay, play on, play on.

Meanwhile CEOs are making 20% profit. This sends a message that bad behaviour is rewarded. What person does that? We do not do that in our home life. We do not reward bad behaviour, and if we do, it will probably not lead to a good solution in the end. No one does that kind of stuff and that is what we have done with CEO compensation.

Look at Target, for example. It came in and took over a Canadian company, Zellers, which was making a profit. That is key. Zellers was making a profit. It also had a unionized workforce and a wage just over the minimum. It had some benefits and it was making a profit. It was a company that was fulfilling its mandate for people, being a place to work, a place with benefits, a place that respected Canadian laws, but Target came in and what did it do? It ended up going bankrupt and shutting Zellers down, and the CEO of Target, Gregg Steinhafel, received a severance package of $61 million, just $10 million shy of the total severance package for the entire Target workforce. Great, that is capitalism at its best. That is a wonderful example of the Canadian dream being fulfilled.

I recently reviewed the Investment Canada Act, which has had so many changes made to it by previous Liberal and Conservative governments, it is in shambles with regard to this type of behaviour. There was nothing wrong with forcing Target to have some type of mandate or guarantees when it came into this country, so that we could preserve these workers' jobs and stop a bunch of black holes in shopping malls in communities across this country just because of corporate greed.

At the end of the day, with $61 million I am sure that the former CEO is not in our country. The people with the compensation are here and wondering what to do. Guess what we do as taxpayers? We have to fill in the pensions, the employment insurance, and we have make sure that employees get retrained or find other jobs. So CEO compensation is significant and it goes on. The CEO with the highest pay, but worst stock return, is Donald Lindsay. His compensation right now is $9.6 million and there is no remorse on his part. Encana Corporation compensation is $10.8 million. Scott Saxberg of Crescent Point Energy Corporation gets $8.8 million in compensation, despite the company's shareholder falling by 34.5%.

All of these things are taking place that detract from what could be in the bill and what could be greater accountability for Canadians. When we review the bill, let us make sure we crack open the elements that are necessary for full accountability. The big difference and why Canadians need to care more than ever before is that many Canadians are now investing in their own funds for their future. They go online and make purchases and that is why we need to make sure they have their rights protected.

[Diane Finley, Conservative, Haldimand—Norfolk, ON]

Madam Speaker, the Minister of Innovation, Science and Economic Development introduced Bill C-25, which is 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 proposed amendments by the Liberals in Bill C-25 stem from a House of Commons committee-led statutory review in 2010, which in turn led to further consultation undertaken in 2014 by our previous Conservative government. Stakeholders raised many important and complex points on a number of aspects of corporate governance during those consultations.

After our previous Conservative government concluded the consultations in 2014, we made a proposal to modernize Canada's corporate governance framework in our 2015 budget. For those in the House who may not be aware, let me read an excerpt from page 140 of that 2015 economic action plan:

...the Government will propose amendments to the Canada Business Corporations Act to promote gender diversity among public companies, using the widely recognized “comply or explain” model...Amendments will also be proposed to modernize director election processes and communications... to strengthen corporate transparency through an explicit ban on bearer instruments...Amendments to related statutes governing cooperatives and not-for-profit corporations will also be introduced...

I hate to steal the minister's thunder, but Bill C-25 is the minister's second piece of legislation he has tabled since being in office now for one year. Just like his first piece of legislation, this, Bill C-25, came straight from our previous Conservative government's 2015 budget.

I am really pleased to see that all the hard work that our previous government did is continuing through the Liberals, and their need to produce at least some form of legislation, but I cannot help but wonder if this is what the Liberals meant when they talked to Canadians about real change.

If adopted, Bill C-25 would result in changes to the corporate governance regime for reporting issuers incorporated under the Canada Business Corporations Act. The CBCA is the incorporating statute for nearly 270,000 corporations. Although most of these are small or medium-sized and privately held, a large number of Canada's largest reporting issuers are also governed by CBCA.

The proposed amendments cover several key corporate governance matters, including majority voting, individual voting, annual elections, notice and access, diversity related disclosure, and shareholder proposal filing deadlines.

I am pleased to see that the Liberals moved forward with the comply or explain model that we recommended. It has been proven that more diverse boards lead to better overall decision-making, better corporate performance, better organizations, and, indeed, better economies.

Our Conservative Party has never been on the sidelines when it comes to diversity firsts in Canada. In fact, it was the Conservative Party who had the first female prime minister; who elected the first female MP to the House of Commons; the first Chinese, Muslim, Black, Latino, Hindu, Pakistani, Japanese, and physically disabled MPs; and that list goes on. That is a record of which to be proud.

Our Conservative Party believes in merit not quotas. I am pleased we are not going to be missing out on talent, nor will we be losing out on that talent because of artificial quotas.

Since the Ontario Securities Commission implemented the comply or explain model just two years ago, the number of women on boards there has steadily increased to 20%.

However, looking at Canada as a whole, in larger companies women make up an average of 34% of boards. Implementing the widely used comply or explain model is the first step to seeing those numbers increase too. If enacted, that change would affect about 600 of the approximately 1,500 companies on the TSX.

When it comes to modernizing corporate governance and reducing red tape, our previous government made massive strides. We believe in fostering an environment in which businesses can grow and contribute to Canada's long-term prosperity. In fact, we recognize that businesses play a vital role in creating jobs and generating economic growth, and that strong business strategies are central to a company's success in creating and sustaining a competitive edge.

The changes proposed to the Competition Act, as we are discussing today, will do just that. They would reduce business uncertainty, create a competitive marketplace, and prevent anti-competitive practices. The amendments would also reduce the administrative burden on businesses.

Our previous Conservative government set a precedent, the first of its kind in any country in fact, when we introduced the one-for-one rule, which brought a new level of discipline to how government fosters a more predictable environment for business through the reduction of red tape.

We took a number of steps to reduce red tape facing businesses. Indeed, since 2012, the red tape reduction action plan has proven to be a successful, system-wide control on the growth of regulatory red tape. Our previous government saved Canadian businesses over $22 million in the administrative burden, as well as some 290,000 hours in time spent dealing with the unnecessary regulatory burden.

Further enhancing the changes that we made while in government, Bill C-25 was to be our next step in maximizing corporate governance.

More accountability and transparency are key for any organization in government, and a high performance board is one that is accountable. The right to vote is important for shareholders and for fundamental democracy.

I am pleased to see that shareholder democracy and participation will better align with securities rules and that corporations would be required under the CBCA to hold annual elections, elect directors individually, and use a majority voting standard. This proposal will bring an end to the debate over those circumstances in which an under-supported director may remain on the board.

The proposed amendments in Bill C-25 would further implement many policies and practices that are already addressed under TSX rules and security laws. Modernizing the acts addressed in Bill C-25 is a welcome improvement to the federal corporate statute and a reflection of the need to enhance companies' corporate governance practices.

If the minister wants to continue putting forward legislation that comes straight from Conservative budgets, well, those would be welcome too.

[Navdeep Bains, Liberal, Minister of Innovation]

moved that 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, be read the second time and referred to a committee.

Mr. Speaker, I rise to speak to Bill C-25. This government is making innovation a priority. That means means helping Canadian companies drive growth and create jobs that strengthen the middle class. It also means growing companies that can compete in the global marketplace.

The government's inclusive innovation agenda is a plan to drive economic growth through innovation. As legislators, we have a responsibility to set the ground rules for doing business, and we have the means to create the winning conditions for people and companies to innovate and thrive.

It is no accident that our innovation agenda has the word “inclusive” attached to it.

This government recognizes that our country is at its most prosperous when everyone has a fair chance to succeed.

Bill C-25, which I present to the House today, makes important adjustments to the framework laws that govern the Canadian marketplace. These laws set out how corporations are organized.

They also promote investor confidence and a competitive marketplace. These conditions support long-term investment and economic growth, and this bill would make it easier for Canadian companies to harness their innovation to succeed. It would also position businesses to operate in the global and digital marketplace.

Before describing these changes in more detail, I will speak to the global context in which these framework laws operate.

Today's marketplace is complex and changing rapidly. Global companies are becoming local companies and competitors, and new technologies are providing companies with vast amounts of information to make decisions.

Technology also allows transactions to happen quickly across the global, and the global marketplace is more interconnected then ever before. A disruption or discovery in one part of the world can have profound consequences in another.

To remain competitive, companies must understand how their partners, suppliers, competitors, and customers do business. Our government is committed to making Canada a global innovation leader.

This means enabling businesses to grow, increasing our country's productivity, and creating well-paying jobs for the middle class. It also means Canada's marketplace framework laws must be updated to reflect a global and digital economy.

These laws must be updated to enhance investor confidence, foster competition, and contribute to an inclusive economic growth agenda. These laws should also support investment and innovation without unduly burdening businesses.

The amendments I have tabled today would provide the foundation for a 21st century marketplace.

They will align Canada’s framework laws with best practices in jurisdictions around the world.

The bill sets out measures to modify the way corporate directors are elected. The bill also contains measures to improve diversity on corporate boards and in senior management level positions.

The goal is to attract the best and brightest from as wide a talent pool as possible. This is how Canada can make full use of the competitive advantage granted to us by this extraordinary diversity of our population.

Additionally, Bill C-25 would improve corporate transparency.

It will eliminate outdated instruments of commerce and modernize shareholder communications. These changes will reflect the new norms and practices of a digital economy.

The bill would increase business certainty and flexibility as well. It would allow Canadian businesses to focus on what makes them most productive, efficient, and innovative. The laws being amended in this bill include the Canada Business Corporations Act, or CBCA.

This statute sets out the rules that facilitate the interaction among shareholders, directors, management, and other interested parties involved in corporate decision-making. In 2015, there were approximately 270,000 companies incorporated under the act. The CBCA serves as a model for other governance laws.

The Canada Cooperatives Act is the framework legislation for federally incorporated non-financial co-operatives. The Canada Not-for-profit Corporations Act is the framework law for non-share capital corporations. In 2015, there were more than 19,000 federally incorporated not-for-profit corporations under the act.

The Competition Act is a law of general application that addresses anti-competitive business conduct. It examines and seeks to address the activities of firms that may be harming competition in the marketplace. By improving and clarifying the rules under which our firms operate, we are positioning them for long-term growth.

We are also aligning Canada’s practices with international best practices in corporate governance.

October is Women's History Month. This is a time when we celebrate the women who have shaped Canada's history as leaders, entrepreneurs, scholars, artists, and trailblazers in all spheres of life. Let me address what the bill does for diversity.

As I have said before, I firmly believe it is our moral duty to promote diversity and inclusion.

Under-representation of different segments of our population is not only a question of fairness, it affects the bottom line. In the boardroom, as in life, taking into consideration viewpoints from a variety of perspectives can lead to innovative thinking and better performance. Innovation requires fresh ideas, new ideas, and the best ideas can come from anyone, anywhere.

We live in an age when anyone with a smartphone can connect, create, collaborate, trade, and sell, regardless of distance. Because the tools to create knowledge and value are now available to everyone, a teenager can start her own technology company.

A university student can launch a social-media platform that becomes a global sensation overnight.

The broader the talent pool, the greater the potential for the next great app to emerge.

Our government is committed to doing all we can to unlock the full potential of Canadians, especially those who are under-represented in certain sectors of today's economy. I know that all parliamentarians support this goal as well.

Earlier this year, this Parliament unanimously passed, and this was a point of pride, Bill C-11, which allowed Canada to become the first G7 country to adopt the Marrakesh Treaty. I was proud to announce this piece of legislation in the House and see it receive the support of all parliamentarians.

The Marrakesh Treaty benefits three million Canadians who are visually impaired or print disabled. As a result of the treaty, they will have better access to books and other copyrighted materials. As a result of better access to knowledge, these Canadians will be able to fully participate in the economy. That is how our government's commitment to diversity allows Canadians from all walks of life to become productive members of society.

Bill C-25 builds on that commitment to innovation and prosperity through diversity.

As part of the reforms to the CBCA, corporations would be required to disclose to shareholders the composition of their boards and senior management. They would also be required to make public their diversity policies. Those corporations without a diversity policy would have to explain why they do not have one.

This amendment will complement existing measures already adopted by most provincial securities regulators.

It would apply to all publicly traded CBCA corporations, regardless of which securities regulator they reported to.

By taking into account the composition of boards, investors could make informed choices when they exercised their voting rights.

These reforms are designed to facilitate a conversation between shareholders and corporations on how they are promoting diversity.

The goal is to encourage corporations to consider a broader range of candidates and skill sets among their senior leaders.

The second set of amendments contained in Bill C-25 aims to promote greater shareholder democracy. The goal is to ensure that the voting process allows shareholders to have their voices heard in a meaningful way.

The bill would make three key reforms to the process of electing corporate directors. These reforms would affect publicly traded CBCA corporations and publicly traded co-operatives incorporated under the Canada Cooperatives Act.

First, the bill would require the prescribed corporations and co-operatives to hold annual votes for the election of corporate directors. Currently the law permits directors to hold office for up to three years before a vote is required. The entrenchment of company boards can hamper innovative thinking.

Ensuring that shareholders can make changes more often is a step in the right direction.

Second, directors under the CBCA would be elected individually, not as a slate or a group of candidates. An all-or-nothing approach prevents voters from meaningfully exercising their democratic rights and bringing in the board they want.

Third, the bill would permit shareholders to vote explicitly against a candidate in an uncontested election, that is, when the number of candidates was the same as the number of board positions to be filled. Even when there was no competing candidate, a prospective director would still need enough votes in support of her candidacy to make up a majority of the votes cast to be elected.

Of course, there is more to shareholder participation than simply voting. Transparency and clarity are important to shareholders as well.

The bill would modernize shareholder communications to align practices with how businesses are conducted today. The bill would permit CBCA corporations and co-operatives incorporated under the Canada Cooperatives Act to provide their shareholders or members with online access to relevant documents related to an annual meeting. This notice and access system would reduce costs, conserve resources, and increase business efficiency.

In addition, the bill would simplify the deadline for shareholders to submit proposals to directors so that they could participate in meetings more often and effectively.

The fourth amendment would make it clear that CBCA corporations and federal non-financial co-operatives would be prohibited from issuing share certificates and share warrants in bearer form. Much like cash, a bearer share is owned by whoever holds the physical stock certificate. The issuing firm neither registers the owner nor tracks any transfers of ownership, and when these instruments are issued in blank form, they can be used as a vehicle for money laundering or terrorist financing. That is because they are easily transferrable and untraceable.

This amendment would require all shares to be registered. It is a preventive measure that would be particularly relevant to law enforcement.

It will ensure that Canada aligns its rules with the recommendations of the international Financial Action Task Force.

The bill would also amend the Competition Act to broaden the understanding of what makes one business entity affiliated with another. Currently, because of its outdated definition, there is a risk that business between affiliates could be viewed under the law as a joint action with competitors.

The existing law does not fully account for non-corporate structures, such as sole proprietorships, partnerships, or trusts. This uncertainty could lead to companies being needlessly exposed to sanctions under the act, and re-organization among affiliated companies could be interpreted as a merger of competing firms.

That process could require notifying the Commissioner of Competition. It could also incur a fee and a significant amount of paperwork. There is also the risk that a collaborative project between two affiliated companies could be treated as an arrangement between competing firms. It could be misrepresented or misinterpreted as harmful competition or outright collusion.

To address this legislative gap, the bill would update the Competition Act's rules on affiliation and would make the rules business-structure neutral. This update would ensure, clearly and explicitly, that businesses that are engaged in joint ventures with their affiliates are not subjected unwittingly to the act's enforcement provisions.

This amendment will create certainty and replace an outdated framework that can cost businesses unnecessary time and resources.

One of the key features of this bill is that it positions Canada among world leaders in corporate governance. For example, most member states of the European Union have implemented gender diversity legislation. Both the United Kingdom and Australia have required disclosure, including a comply or explain model in the latter case, which saw significant improvements in terms of board representation.

In the United States, publicly listed companies have adopted policies on majority voting for corporate directors. Even in Canada we have seen provincial securities regulators adopt similar rules that promote greater shareholder participation and corporate diversity.

These amendments are an important step forward.

They would modernize corporate governance laws to align with today's technological realities and support business efficiency. They would promote greater transparency, accountability, and public confidence in the marketplace and give investors the information they need to make informed decisions about their investments.

Above all, these amendments recognize the great asset that is our country's diversity. Canada's business community would have a crucial role in promoting diversity. Some have already done so, and I know that others will step up to show that they are committed to growing our economy by tapping Canada's full potential. By modernizing our ground rules and aligning with international standards, Canada can position itself for the inclusive innovation and growth that would propel this country going forward.

I am proud to be launching this important initiative today on behalf of the Government of Canada.

Business of the House

[Bardish Chagger, Liberal, Leader of the Government in the House of Commons and Minister of Small Business and Tourism]

Mr. Speaker, I have to agree with the opposition House leader. It has been quite delightful to work together, and I hope we can continue the relationship we have created so we can be productive in this place for Canadians.

This afternoon we will continue debate on the Conservative motion. Tomorrow, we will begin second reading of Bill C-26 respecting the Canada pension plan.

We will call the bill on Monday and, hopefully, conclude debate on Tuesday. On Wednesday, we will commence debate on Bill C-25, the business framework legislation. Thursday shall be an allotted day.

Finally, I would like to thank all hon. member for the progress on legislation so far this week.

Status of Women

[Navdeep Bains, Liberal, Minister of Innovation]

Mr. Speaker, I thank my colleague for raising this important issue.

Last week, I was pleased to introduce Bill C-25, which seeks to improve corporate transparency and diversity. It will help increase the number of women on boards of directors and senior management teams.

I invite all members to support this bill.

Canada Business Corporations Act

[Navdeep Bains, Liberal, Minister of Innovation]

moved for leave to introduce 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.

(Motions deemed adopted, bill read the first time and printed)