Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 16 - The Eighth Report of the Committee
Thursday, February 3, 2011
The Standing Senate Committee on Banking, Trade and Commerce has the honour to present its
EIGHTH REPORT
Your Committee, to which was referred Bill S-206, An Act to establish gender parity on the board of directors of certain corporations, financial institutions and parent Crown corporations has, in obedience to the Order of Reference of May 13, 2010, examined the said bill and now reports as follows:
Your Committee believes that Canadian corporations and institutions are best served when they do not limit themselves to the talent of just one gender and that having more women at the top improves financial performance. Therefore, gender diversity and strong corporate performance go hand in hand.
In this light, your committee sympathizes fully with the motives underlying Bill S-206's approach and applauds the bill's sponsor for her commitment in bringing the bill before Parliament and for her valuable contributions to your committees' deliberations.
Your Committee recommends that this Bill not be proceeded with further in the Senate for the reasons that follow.
Your committee believes that Bill S-206 attempts to impose requirements in federal law on the composition of provincially-incorporated and foreign-incorporated public corporations operating in Canada which raises a number of legal and constitutional issues. Moreover, while the bill gives the Director appointed under the Canada Business Corporations Act the authority to issue one-year deferments to these non- Canada Business Corporations Act corporations, it does not seem to give the Director any authority or role in ensuring non- Canada Business Corporations Act corporations comply with the gender parity requirement;
Your committee notes that the corporate governance provisions of the Canada Business Corporations Act and other federal statues concerning financial institutions aim to provide a framework that allows companies to decide how they should operate. Bill S-206, if enacted, would move away from this principle. The shareholders are better placed to decide on the composition of their company's board of directors;
Your committee is aware that federal corporate statutes aim at fostering best corporate governance practices with a view to have the best qualified persons sitting on board of directors. Canadian corporations are already increasing the number of women on their boards. In the period 2006-2008, twenty-one percent of new director appointments in major companies were women, up from thirteen per cent in the period of 2003-2005; and
Your committee notes that Bill S-206's requirement for statutory declarations for all applications for certificates under the Canada Business Corporations Act will increase the regulatory and paper burden on corporations and would severely compromise the current system of electronic online applications. This may increase the costs of processing these applications, which could necessitate an increase in service fees. This increase in regulation could ultimately discourage federal incorporation.
Respectfully submitted,
MICHAEL A. MEIGHEN
Chair