Mr. Speaker, I will address my remarks to the contents of Bill C-12. I resist corroborating the opinion that was expressed by the member opposite that if the bill is really not a major bill then it should not receive major debating time. If there are major points to be made then let us make them. However we have to be very careful not to abuse our privileges.
Bill C-12 as I understand it represents amendments to the Canada Business Corporations Act which will govern approximately 190,000 Canadian federal business corporations, including over 50 per cent of Canada's top 500 corporations.
This is the first phase of amendments designed to improve the competitiveness of Canadian business, simplify filing and record keeping requirements and certain corporate governance procedures and allow for technological innovation. The bill also begins the process of modernizing federal corporate law.
Amendments to Bill C-12 are purported to be of a largely technical nature. While this is in essence true we feel certain amendments could have ramifications far beyond the technical level.
We applaud those amendments to Bill C-12 that will result in simplifying filing and record keeping requirements and certain corporate governance procedures, allow for the technological innovation and better service to all regions of Canada, enhance the efficiency and effectiveness of the administration of the CBCA and clarify the language of the act through changes to the French and English versions and through the use of better terminology. It will promote good governance in corporate enterprises-at least that is what the intent is-facilitate efficient and flexible business management while protecting investors, including minority shareholders, and foster a fair and efficient marketplace.
It is purported to provide flexibility for corporations to act quickly and with less expense to unforeseen events by permitting current directors to appoint a limited number of directors in the time between shareholder meetings, if the corporation's bylaws permit that to happen.
We recognize that these measures are part of the government's commitment in the speech from the throne to focus on small and medium sized businesses. We encourage measures that are designed to improve the competitiveness of Canadian business. By encouraging internal trade within Canada and by helping business pursue an active international trade policy, we can place our federal corporations in a better competitive position.
We would be pleased if the reforms that are currently within the amendments to the CBCA accomplish all of these objectives. Certain provisions however require closer scrutiny and should be noted.
First, the provision to eliminate public financial disclosure for larger privately held corporations may allow certain public companies to transfer assets to private companies under their control and thereby avoid financial disclosures of these private subsidiaries.
Sections 16 and 17 regarding financial disclosure, while apparently not significant to the minister, being simply of a
technical nature, should be recognized as a substantive departure from the current provisions. They are not technicalities as suggested by the minister. They should be studied by the committee with a promise to consider moving them to the second part of the amendments to this act.
Notice is hereby given as well that two other matters are of concern to members of our party and will be drawn to the attention of the committee studying the bill. They are, first, the new section, 258.2, which allows the director to exempt notices or documents from having to be sent to the director in the prescribed circumstances. This is potentially a very wide provision if the governor in council chooses to prescribe wide circumstances.
We have been advised by department officials that this is intended to apply only to cases where documents are publicly available elsewhere. To make sure this is the sole reason, an amendment to that effect is required. The amendment could be something like this: "If a notice or document is required under this act to be sent to the director must be made public by some other provision of or made pursuant to another act of Parliament other than this act, the director may, by order made subject to the condition that the other provision has been complied with and any other conditions the director may consider appropriate, exempt the notice or document from the requirement under this act that it be sent to the director".
The second amendment that ought to be looked at refers to section 8(2). This section provides a previously unregulated period for which records must be kept. The minister mentioned that presently the act is silent on this and that we need to recognize under the Income Tax Act and the provisions thereof that claims to be made by the minister may be made for six years back and the limitation on actions in contracts in most and maybe all provinces is six years after the cause for the action arises.
In light of these provisions it seems strange to have a six year minimum, as longer record retention is generally mandated by other legislation and by common sense. It would appear to be better either to leave out this provision or to avoid redundancy and to have a longer period, say eight or ten years. Eight years would certainly cover the income tax provision and meet most contract litigation needs.
There is a second reason why the provision which will see record keeping reduced to six years may be inadequate. Litigation procedures may be started after six years so the requirement should be, in our opinion, probably something like ten years.
The second phase of the reforms that are being talked about here should also be referred to at this time. We are alerted that consultations for phase two reforms have apparently started already. They includes issues like the liability of corporate directors; shareholder communications both between the corporation and the shareholders and also among shareholders; citizenship and residency requirements currently imposed on boards of directors; financial assistance granted by the corporation to directors, officers, shareholders and others; and governing insider trading and takeover bids. Each of these areas are very substantive in nature and will require very careful and detailed examination and study.
Their importance to the federal business corporations and to Canada's competitiveness is clear. The expansion of directors' liability may be leading some qualified people for example to refuse board appointments. For a corporation to be successful, qualified people must be willing to serve on boards and once there to take bold steps in order to compete in the global marketplace.
We also encourage commitment to continued reform. It is absolutely amazing this particular act has not been revised over the last 20 years. If we compare business practices of 20 years ago to today and the competition that exists out there I find it almost unbelievable that the act still fits. It does not fit too well and that is why it is before us today. So we are encouraging continued reform.
The proposed amendments require the minister to submit within three years of this bill receiving royal assent a report to Parliament on the provisions and operation of the act, including recommendations for further changes to the law.
We heard the hon. minister say about an hour ago that within 18 months he expects to bring this forward. I certainly would encourage him to meet that deadline.
In general we support the objectives of the bill. We recognize the government's efforts to meet one of its promises as set out in the speech from the throne. However we would caution the minister from viewing all of the amendments to this bill as technicalities. While in some instances this is essentially true there are other areas, as demonstrated in the text of my speech so far, that require closer and more cautious scrutiny.
I am confident that once this bill is referred to committee, government members will agree that some safeguards must be implemented to protect shareholders, the corporate structure and finally the Canadian marketplace. Once this is accomplished I believe Bill C-12 will meet its objectives of promoting a fair and efficient marketplace and an economic climate that is conducive to sustained growth and job creation.
We look forward to the referral of this bill to the committee. We will take the opportunity then to ensure that Bill C-12 meets its objectives in a manner satisfactory to all sides of the House.
(Motion agreed to, bill read the second time and referred to a committee.)