Industry Committee on Nov. 4th, 2009

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Marston.

Mr. Garneau.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Thank you, Mr. Chair.

I understand that among other things the changes that were made in 2001 were intended to improve the rights of shareholders. I'd like to have your personal opinion on whether, based on feedback you've received, that goal has been achieved.

[Colette Downie]

I can only say that I haven't heard any feedback from any stakeholders that it has not. No major concerns have been brought to my attention so far about their rights or the integrity of shareholder rights under this statute.

[Wayne Lennon]

If I may add to that, as I said earlier, the statute allowed institutional investors, especially, to speak with themselves and to form organizations to lobby on behalf of or to act on behalf of shareholders with corporations. That was a major step forward in freeing up the power of shareholders to win awards. That was a power they didn't have before.

The other thing we did in the 2001 amendments was to dramatically open up the procedures by which shareholders could submit proposals to the board and have them circulated to other shareholders at company expense in preparation for the annual meeting. There were fairly draconian restrictions on that; for instance, beneficial shareholders, guys like me who might have two or five shares, couldn't do it. Those are opened up now. There are a number of avenues for shareholders to approach the board and to approach other shareholders in advance of annual meetings to get certain views discussed at the annual meeting. In my anecdotal experience from talking to some of the stakeholders over the years, the number of shareholder proposals has increased since the 2001 amendments, and corporations are paying much more attention to them.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Thank you.

My other question has to do with the overall level of scrutiny of corporate activity. Does the act provide for sufficient scrutiny by shareholders of the activities of a corporation, in your opinion? Is there sufficient transparency? That's what I'm getting at.

[Wayne Lennon]

Again, most of the transparency with respect to publicly traded corporations is handled through the continuous disclosure requirements of the securities commissions. They're fairly extensive and they've been revised a few times in recent years. The CBCA does require some disclosure of information through the proxy circular that's given to shareholders in advance of the meeting, so again there's a complementarity of effect there.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Garneau.

Go ahead, Mr. Brown.

[Gord Brown, Conservative, Leeds—Grenville, ON]

Thank you very much, Mr. Chairman, and thanks to our witnesses for coming today.

This is a statutory review. I'm not familiar with any real push from anyone to see us do any real changes. Is there anything we haven't heard today that the witnesses, each of you, could suggest in terms of amendments, or anything we should be looking for? As I said, it is a statutory review, so we aren't really being driven to do this by anything that is happening, other than the statutory requirement.

[Colette Downie]

Really, the issues I'm aware of are the ones I listed a bit earlier. I'll turn to my colleagues to see if they have any additions to that list.

[Wayne Lennon]

There is nothing major. I helped compile the list, so it's pretty complete, as far as I know. There are a number of technical amendments that would certainly smooth the act, streamline it, make it more user-friendly, eliminate some drafting errors in the previous act, or something like that.

There may be a lot of things out there. We just don't know. We haven't heard them, and perhaps one of the useful functions of this committee would be to hear from witnesses as to what they've come up with that we would want to investigate and explore.

[Gord Brown, Conservative, Leeds—Grenville, ON]

If we were going to go ahead with any hearings, could you suggest anyone we might bring in front of us to shed additional light on this aspect?

[Wayne Lennon]

As I said, the Canadian Coalition for Good Governance is one of the leading organizations of institutional investors in the country. From the shareholder point of view they would be very good, as would the Shareholder Association for Research and Education.

The business groups are well known. The Canadian Bar Association and Le Barreau du Québec would also probably have their own insights.

[Colette Downie]

I suppose you might consider the Canadian Chamber of Commerce and the Canadian Federation of Independent Businesses as well. They always have very interesting and helpful insights, in my experience.

[Gord Brown, Conservative, Leeds—Grenville, ON]

Okay. Thanks very much, Mr. Chairman.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Brown.

Go ahead, Monsieur Bouchard.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Thank you, Mr. Chair.

I think you answered the question. You anticipate conducting a review of the Canada Business Corporations Act, along with the committee. Officials from Industry Canada came before the committee on Bill C-4 and told us that they planned to modernize certain provisions, particularly with respect to securities transfer. This may have already been discussed, but I was away for a period of time.

Have you heard that it would be important to review these provisions specifically?

[Colette Downie]

That's certainly an issue we've heard about and that we expect some stakeholders would bring forward. It was one of the issues on my list. It really is whether the security transfer provisions in the Canada Business Corporations Act should be removed because there are already provincial pieces of legislation that deal with that very issue.

[Wayne Lennon]

It's also useful to know that the transfer-of-securities provisions are also in the Bank Act and the Trust and Loan Companies Act and the Insurance Companies Act. So for a uniform framework, it would be best to address all those acts at the same time.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

I have one last question before I give the floor over to my colleague.

Does Industry Canada regularly consult with stakeholders on the implementation of the Canada Business Corporations Act, or does everyone sit on their hands? What is the procedure?

[Colette Downie]

We don't conduct regular consultations in the sense of automatic consultations every two years or something like that. We have consulted on issues as they have come up. For example, there were consultations that followed the WorldCom and Enron issues. I gave an example of that in my presentation.

The staff in my branch are very active. Wayne is actually very well known in the community, so stakeholders don't hesitate to call and let us know when they have concerns and issues. Our staff are very active in attending conferences and listening for issues, watching the media. We also have regular contact with some of the business organizations in Canada, like the Canadian Federation of Independent Business, for example, again listening for issues and concerns about all of the legislation that we're responsible for.

[The Chair, Conservative, Michael Chong]

Thank you.

Mr. Vincent.

[Robert Vincent, Bloc, Shefford, QC]

Thank you.

You know that public opinion is being felt very strongly these days. That is the case all over the world. The US president even decided to limit the salaries of executives at GM and Chrysler.

In your opinion, does the current version of the act provide sufficient tools to limit the compensation of directors and avoid excessive packages in difficult economic times? Does the act include any provisions that provide some semblance of transparency to shareholders, the public and company workers? Would the act need to be amended in order to do that? I would also like to know how you plan to amend section 125.

[Colette Downie]

We didn't come here today with any proposals for amendments. We really are here to provide information and background on the statute itself. As I mentioned before, we're certainly going to be watching the committee hearings and looking forward to the report of the committee in terms of deciding whether there should be amendments made or not.

With respect to whether anything else could be done in the statute to deal with executive salaries, it's not a statute that's really designed to be regulatory. It's a framework piece of legislation. So it's suggested that as the committee is considering whether amendments should be made to specify or regulate executive salaries, that's one big issue to consider, whether something regulatory or directive would fit in a statute like this. As I also mentioned before, it's one of a number of pieces of corporate legislation. So even if it were regulatory or directive in terms of executive salaries and compensation, it would require all of the other corporate statutes in Canada to make similar changes or else corporations could just move jurisdictions to avoid such a provision.

Those are really the two key considerations I'd bring to your attention.

[The Chair, Conservative, Michael Chong]

Mr. Bouchard, you have the floor.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Thank you, Mr. Chair.

Earlier, I mentioned the Charter of the French Language in Quebec and the possibility of provisions that compel companies to respect that charter. You said that we would need to examine the constitutionality of doing that.

I would like to point something out to you. Minimum wage is a priority in every province and is respected in every province; minimum wage is mentioned in the Canada Labour Code. To my mind, that shows that we could pass an amendment in the future that would have to be respected in every province, similar to the minimum wage reference in the Canada Labour Code.