The Department of Finance Canada is currently consulting on proposed changes to the governance framework for federally regulated financial institutions (FRFIs) to reflect changes that have been made to corporate legislation regarding diversity requirements, as well as to permit the use of additional electronic communications by FRFIs and allow all-virtual meetings.
The Canada Business Corporations Act (CBCA) was amended to include diversity disclosure requirements for reporting issuers that are federally incorporated with respect to the representation of women, visible minorities, Indigenous peoples, and people with disabilities on their boards and in senior management. Information must also be disclosed on the policies and targets for representation, or an explanation must be provided as to why the issuer does not have such policies and targets. Similar rules are included in securities legislation in most provinces that apply to provincially regulated reporting issuers where disclosure is required on gender diversity on boards and in executive officer roles. The Department of Finance Canada’s consultation asks for comments on applying the CBCA’s comply or explain provisions to FRFIs, as well as whether a prescribed form for the data should be implemented and/or if any compliance measures should be implemented.
Feedback is also sought on the considerations for expanding the use of electronic communications with the owners of FRFIs for the provision of governance documents. The government is considering permitting either a “notice and access” model (where governance documents could be posted on SEDAR and a FRFI’s website instead of mailing materials to owners after notifying owners), or the Canadian Securities Administrators’ (CSA’s) newly proposed “access equals delivery” model (where delivery is effected by alerting owners through a news release that a document is available on SEDAR).
Finally, the Department of Finance Canada is also considering allowing FRFIs to hold shareholder meetings exclusively online, without requiring a court order to exempt them from the current requirements which only allow hybrid shareholder meetings.
Comments on the proposal are due September 23, 2022. Investors/owners in FRFIs may be interested in taking a look at whether these changes could impact communication with and/or engagement with these institutions.
August 17, 2022