Industry Committee on April 21st, 2009

[The Chair, Conservative, Michael Chong]

We shall now begin our meeting.

I want to thank Mr. Lake, Madam Coady, and Monsieur Bouchard for proposing amendments to this bill. Thank you very much. I know how involved it is to come up with these amendments and have them translated, so I want to thank each of the three of you for doing this.

We are going to go clause by clause today on Bill C-4, and we're going to do it sequentially so that we're clear which clause we're working on. You have been given two sets of amendments. One set of amendments has been proposed by Liberal and Bloc Québécois members. It's the thinner set of papers you've been given. The second set you've been given is amendments proposed by the government, and it's the thicker set. The first half of that set is the amendments in English; the second half of the set is the amendments in French.

So without further ado, we'll begin with clause-by-clause consideration. We have joining us today three public servants from Industry Canada. We have Mr. Roger Charland, who is the senior director of corporate and insolvency law policy at the internal trade directorate. We have Mr. Wayne Lennon, the senior project leader, corporate and insolvency law policy at the internal trade directorate. We also have Madam Coleen Kirby, who is the manager of the policy section, Corporations Canada. They're here to assist us and to answer any questions you may have.

Perhaps you could introduce yourself. We have the legislative clerk with us today.

[Marc Toupin, Procedural Clerk]

My name is Marc Toupin. I'm the legislative clerk from the legislative services branch, and I'll be here to assist members during the clause-by-clause review of the bill.

[The Chair, Conservative, Michael Chong]

Thank you very much.

Pursuant to Standing Order 75, subsection 1, consideration of clause 1 is postponed.

I call consideration of clause 2, and the first amendment we have proposed on this clause is the Conservative amendment. Mr. Lake, would you care to speak to your first amendment?

(On clause 2—Definitions)

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I think in the interests of time, rather than my trying to explain each of the things, what I'll do is just defer each of these changes to Coleen, if she could kind of give a quick explanation. Most of the things we're moving here come out of the testimony, so a lot of them are just minor tweaks from the Canadian Bar Association's testimony.

Coleen, could you speak to that first amendment?

[The Chair, Conservative, Michael Chong]

So Mr. Lake has moved the amendment. Madam Kirby, would you care to comment on the government's amendment?

[Coleen Kirby, Manager, Policy Section, Corporations Canada, Department of Industry]

I'm assuming it's the amendment to the definition of public accountant.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

This is that clause 2 be amended by replacing lines 15 and 16 on page 3.

[The Chair, Conservative, Michael Chong]

Madam Kirby, we're following the amendments—

[Coleen Kirby]

Yes.

[The Chair, Conservative, Michael Chong]

—as proposed on the first page here. If you could follow along, that would be helpful.

[Coleen Kirby]

This has to do with the definition of public accountant. It is based on a comment from the Canadian Bar Association. The definition as it's currently drafted in the bill references the two main ways a public accountant is appointed, either when the corporation is first created or at each annual meeting.

The Canadian Bar Association pointed out there are three other ways a public accountant could be appointed. Two are associated with a vacancy in the position and the final is if it's a court-appointed public accountant. The amendment is simply expanding the definition so that all five references to where a public accountant could be appointed are referenced in the definition itself.

[The Chair, Conservative, Michael Chong]

Is there any further discussion on this amendment?

(Amendment agreed to) [See Minutes of Proceedings]

[The Chair, Conservative, Michael Chong]

The second amendment we're going to consider for clause 2 is actually two amendments. One is proposed by the Liberal Party on the first page of the smaller stack of amendments. The second amendment is proposed by the government, both amending line 21 in clause 2.

Pardon me, Madam Coady?

[Siobhan Coady, Liberal, St. John's South—Mount Pearl, NL]

I was asking Mike whether he was trying to do (a), (b), and (c) at the same time; ours took (a) and (b) separately.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Oh, is it separately?

[Siobhan Coady, Liberal, St. John's South—Mount Pearl, NL]

So we may just want to....

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Okay. Do you have a thought on what—

[The Chair, Conservative, Michael Chong]

Just one moment.

Let's begin with Madam Coady's amendment and have Madam Coady explain her first amendment to clause 2.

[Siobhan Coady, Liberal, St. John's South—Mount Pearl, NL]

Did you say the amendment to clause 2? Okay.

This is with respect to clarifying soliciting versus non-soliciting corporations, so that we can work towards a better go-forward definition of soliciting versus non-soliciting You'll recall that we had both the CBA and Imagine Canada and a number of different people talking about this definition as being a little confusing and needing some clarification.

The first one would be that the period covered would be immediately preceding the financial year in which the money was received; it's a change to paragraph (a) of the definition of “soliciting corporation” in clause 2.

We have both. I don't know how the chair would like to handle this matter, because we're making a recommendation and they're making a recommendation in the same area.

[The Chair, Conservative, Michael Chong]

Well, because your amendment was received prior to the government's amendment, we're going to consider yours first. But if you're amenable, you could withdraw both of your proposed amendments and the government could move its amendment instead, and the committee could choose to adopt the government amendment.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Can I make a suggestion?

We can always discuss yours after this one. I think it makes sense, given that the longer one.... The departmental officials can probably comment on why we would make the change we propose to make in our proposal. If that doesn't satisfy what you're trying to accomplish, we can always talk about yours as well.

[Siobhan Coady, Liberal, St. John's South—Mount Pearl, NL]

Sure, and one might include them.

[The Chair, Conservative, Michael Chong]

Madam Kirby, could you comment on what the government's amendment proposes to do—the one that's found on the second page? Madam Coady might possibly be comfortable with what the government is proposing.

[Coleen Kirby]

The amendment motion is written with an (a) and a (b) part. This is only done because of the way we have drafted or amended the definition of “soliciting corporation”. It has to be moved out of the actual definitions and listed separately. What I will comment on is the (b) part of the motion, which is the substance.

What the Canadian Bar Association and a few others commented on was some concern about determining exactly at what moment a corporation became or ceased to be a soliciting corporation, and over what period you're looking at income to determine whether in a particular fiscal year they are over the $10,000.

What we have tried to do, again keeping as much as possible of the detail in the regulation, is add two new things that will be prescribed. The way this definition will now work, you will do a calculation to determine whether you were over the threshold on the last day of the financial year-end. It will work such that you are looking at a period of 36 months, from the financial year-end backwards. We cannot just count back three financial year-ends, because under the Income Tax Act you can have a financial year that is less than 12 months long. We're making it clear that this may include four or five financial year-ends, if they have been triggered by the Income Tax Act.

Second, if you are becoming “soliciting” or ceasing to be “soliciting”, that change will take place at an annual meeting. If your financial year-end is December 31 and you're holding your annual meeting May 1, you do the calculation of income based on December 31, but you would become “soliciting” at the annual meeting on May 1, since one of the criteria is the number of directors, and you make that change at the annual meeting.

It has to do with trying to keep track of how long you're “soliciting”, which will be based on your annual meetings. The calculation to determine whether you have the required amount of public funds will be based on your financial year-ends, which is the same moment as that for which an accountant has to put together the financial statements. If there is a public account, the review is done.

This should make very clear when you become and when you cease to be a soliciting company and for exactly what time period you are doing the calculations. That's what we have proposed in this amendment.

[The Chair, Conservative, Michael Chong]

Thank you, Madam Kirby.

Go ahead, Madam Coady.