Industry Committee on March 7th, 2017

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Mr. Chair.

I'm concerned that this amendment doesn't distinguish between the distributing companies and the privately held companies. A lot of start-up companies, especially in the technology sector, take quite a long time. With the company I was in, it took almost eight or nine years before it came to a stable stage. The input from the members of the board is very critical. That is one reason why I'm not for this amendment.

The second thing is that my understanding is also that most of the major distributing companies do rotate their directors.

[The Chair, Liberal, Dan Ruimy]

Mr. Longfield.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you.

Thanks for the explanation of what you're working on there. I was trying to think of what the advantage would be. Similar to Mr. Arya, I was thinking of start-ups, and sometimes it takes more than six years to get up to speed. I was also thinking of larger companies in which the founder stays on as a member of the board of directors. I was thinking that getting more diversity in representation on the board could be achieved by expanding the board. That would be another approach to take.

As far as nailing a company down goes, I think there could be some unintended consequences. You could actually hurt a company by telling it that it had to get rid of the senior person on the board after six years.

[The Chair, Liberal, Dan Ruimy]

Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Those are good observations, but you have to remember, at the end of the day, we're comply or explain. All those things can be done and will be done when they approach the minister, or the representative of the minister, for that comply or explain: “Well, we just got a start-up company going. We have only four members on the board. We're continuous.” Mr. Arya's situation there is taken care of in the comply or explain: “We'll explain. We're a start-up company, so we're not going to transition the board.”

If a start-up is at eight years, there are already six years guaranteed, and the pause isn't even identified there. The pause could be simply a day or two, if they really want to. Again, they'll have to explain it if there are questions, but there will be that opportunity.

It's the same with regard to larger boards. What would be probably more dangerous to a board in many respects would be to actually have to increase the board size. That may not be an operational thing they want, to try to be representative of the public, as opposed to.... Again, those who are championing the comply or explain model will have that full opportunity to do so.

It would make sense if there wasn't the comply or explain aspect of it. But now that we're moving heavily into comply or explain, there's every out possible in this bill. Again, it provides a minister with at least.... We've seen some companies that really do not represent much of Canada. We have this problem. It won't go away in Montreal. It won't go away in Toronto, and all those places, without some leadership.

This gives that opportunity. It doesn't mandate them. They're not going to be shoving people out the door with no consequential analysis. It also gives the minister.... Once again, the whole right is comply or explain. That's the whole mantra of why to go to that model: “Okay, we're not meeting what the government sees as our general society, but we're going to explain it. We're going to explain it to our people who have our shares. We're going to explain it to the public that buy our products. We have legitimate reasons why we want to do this, not just because we're protecting an old boys' network or system that nobody wants to have.”

Again, I think for the merits alone, it's a good back-stop to give the minister a little bit of punch.

[The Chair, Liberal, Dan Ruimy]

Mr. Baylis.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

I have a question.

Does this apply to private companies as well as public companies, distributing companies?

[Brian Masse, NDP, Windsor West, ON]

It applies to—

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Take my personal example. I ran a company my mom started—my mom, me, and one other person. Three of us are shareholders and directors. After six years, do I have to kick myself off the board of directors?

[Brian Masse, NDP, Windsor West, ON]

No.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

If I own the company, and that—

[Brian Masse, NDP, Windsor West, ON]

No, you have to explain. It's comply or explain.

[David Lametti, Liberal, LaSalle—Émard—Verdun, QC]

[Inaudible—Editor]

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

I just want to understand.

[Brian Masse, NDP, Windsor West, ON]

Is the parliamentary secretary allowed to intervene during these sessions? I'm just wondering, because I think he should clearly have the floor.

[The Chair, Liberal, Dan Ruimy]

Let's keep it through the chair, please.

[Brian Masse, NDP, Windsor West, ON]

If you want the floor, just ask the—

[The Chair, Liberal, Dan Ruimy]

Mr. Masse, thank you. I will rule.

Mr. Baylis, it's still your floor.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

I just want to understand that. Even if it's comply or explain.... The vast majority of companies are similar to these small companies, where the owners run them and are the directors. To be fair to the company, the last thing I need is another letter I have to write to explain that, guess what, there are only three of us who own the company, and we're also the directors of the company. Theoretically, the owners hire the directors, who hire the managers. I was the owner, I was a director, and I was the manager. The idea that I'm going to put someone in between and say, “Can I get a job? If not, can you hire me, the director? By the way, if not then I'm going to change you, because I'm also the shareholder.” It makes no sense.

I disagree with it fundamentally. It's just going to add a tremendous amount of work for 95% of the companies in Canada, which are small to medium-sized enterprises that are owner operated.

[The Chair, Liberal, Dan Ruimy]

Thank you.

Mr. Lametti, did you have something...?

[David Lametti, Liberal, LaSalle—Émard—Verdun, QC]

I was just saying this is legislation; it's not comply or explain. This is a fixed rule.

[The Chair, Liberal, Dan Ruimy]

Thank you.

Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

First of all, it's a rather interesting process that we've now embarked on with the parliamentary secretary's inclusion with regard to committee work. It's an inclusion element that came about that clearly undermines Parliament and its independence. That's clear. It's kind of creepy to have them hanging around committee all the time, and then on top of that to be an influence on debate. That's another thing. It just undermines the entire parliamentary independence that is the institution of committees. It's a sad moment, I think. At least we're doing it through microphone, as opposed to non-microphone interventions by the parliamentary secretary.

I would say to Mr. Baylis, congratulations. Under your model, you actually exceeded the Canadian corporations' representation with women on your board of directors.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

I'll let my mom know.

[The Chair, Liberal, Dan Ruimy]

Shall amendment NDP-11 carry?

(Amendment negatived)

(Clause 13 as amended agreed to)

We move now to new clause 13.1 and amendment Liberal-2.

Mr. Sheehan.