– Bill C-97 (additional disclosure requirements). Other amendments announced in March 2019 (Bill C-97) have not yet been proclaimed in
The following changes to the CBCA also came into force on August 31: – A ppointment rights. Prior to August 31, directors could appoint additional members to the board between meetings only if permitted under the corporation’s articles. As of August 31, the statutory default reversed: a board now has the ability to appoint directors unless the articles remove that power. – Deadline to submit shareholder proposals. Prior to August 31, a shareholder proposal had to be submitted to a CBCA corporation at least 90 days before the anniversary date of the notice of meeting issued for the immediately prior annual meeting. Under the new rule, a proposal must be delivered within the 60-day period that begins on the 150th day before the anniversary of the previous annual meeting. For issuers that customarily hold their meetings during the spring proxy season, this change means that shareholders should have a later outside date by which their proposal for an upcoming meeting must be submitted. Because proposals may only be submitted within a 60-day period, however, shareholders are effectively prevented from making early submissions and now need to pay close attention not only to the date when the window for submission closes but also to the date when it opens. We also note that other CBCA amendments have been adopted but are yet to be proclaimed in force: – Notice-and-access. Not yet in force are CBCA amendments to allow federal public companies that meet the requirements of, and are using, notice-and- access under National Instrument 51-102 – Continuous Disclosure Obligations and National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer to make proxy-related materials and annual financial statements available under that notice-and-access regime without seeking investors’ prior written consent or exemptive relief under the CBCA. CBCA corporations that would like to use notice-and-access in the interim period may apply for an exemption.
force. These changes include a requirement for certain CBCA public corporations to disclose to shareholders their approach to remuneration and to hold annual non-binding shareholder say-on- pay votes. The amendments will also impose new disclosure requirements applicable to certain CBCA corporations regarding diversity, the well-being of companies’ employees, retirees and pensioners, and the clawback of director and officer compensation. We discuss these amendments in the 2019 edition of Davies Governance Insights .
KEY TAKEAWAYS
– True majority voting applies to CBCA public companies. As of August 31, 2022, in an uncontested election for the directors of a federally incorporated corporation, a director will not be elected as a matter of law unless that director receives a majority of the votes cast in the director’s favour. In Chapter 4, we provide key considerations for CBCA public company boards to prepare for true majority voting in advance of their next director election. – Other CBCA amendments yet to be proclaimed in force. Federal public issuers and their boards should continue to keep on their radars the forthcoming changes to the CBCA, including the ability to use notice-and-access and further disclosure obligations.
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Governance Insights 2022
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