THE STANDING SENATE COMMITTEE ON BANKING, TRADE AND COMMERCE
EVIDENCE
OTTAWA, Thursday, December 14, 2017
The Standing Senate Committee on Banking, Trade and Commerce met this day at 10:30 a.m., in camera, to consider a draft agenda (future business); and, in public, to give clause-by-clause consideration to Bill C-25, An Act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act, and the Competition Act.
Senator Douglas Black (Chair) in the chair.
(The committee continued in camera.)
(The committee resumed in public.)
The Chair: Good morning and welcome colleagues, invited guests and members of the general public who are following today’s proceedings of the Standing Senate Committee on Banking, Trade and Commerce, either here in the room or listening via the Web. My name is Doug Black, and I chair this committee.
Today we are continuing our examination of Bill C-25, An Act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act, and the Competition Act. The bill was referred to our committee on November 23, 2017. As honourable senators know, we have held four meetings and heard from a variety of witnesses about this proposed legislation, in addition to some written submissions.
I understand that Senator Marwah has a motion for consideration.
Senator Marwah: Notwithstanding the motion adopted by the committee yesterday, I move that the Standing Senate Committee on Banking, Trade and Commerce now proceed to clause by clause of Bill C-25, An Act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act, and the Competition Act.
The Chair: Is there a seconder? Senator Wallin.
Any discussion of that motion?
[Translation]
Senator Dagenais: I realize that we are in public. With all due respect, I have to tell you, once again, that the item on the notice of meeting you just mentioned does not match the one I received, which actually lists consideration of a draft agenda (future business).
This is the first time I have attended a public committee meeting at which the notice of meeting announced conflicts with the one I received at my office. I wanted to make that point.
[English]
The Chair: Any other comments?
Senator Wetston: I realize that we’re talking about a motion here, and we should not restrict ourselves to understand the context. What we are talking about is an important piece of legislation. We’re talking about a piece of legislation that has had all-party support and has been in the Senate for quite a period of time now. I believe there’s an opportunity to move forward at least to clause by clause with this committee today. That would be the right thing to do. I think it would be in the public interest.
I do believe that the motion presented today by Senator Marwah reflects the importance of moving on with an important piece of legislation. So I am looking for the harm in doing that. I’m not seeing any harm in doing that because I don’t believe processes and procedures in this particular case should preclude this committee from doing the important work it has to do with respect to this bill.
[Translation]
Senator Dawson: With all due respect to Senator Dagenais, the committee is the master of its own destiny. If we make a majority decision to proceed with clause-by-clause consideration, I think that is entirely within the committee’s authority. This happened and may happen again in the future.
[English]
Senator Tkachuk: I would like to emphasize that Senator Dagenais makes a very good point. We have not been given notice of clause by clause, Mr. Chair. There was no notice given to senators. We were told to come to a meeting to discuss future business in private. We’re now in public and we’re moving on to an agenda item which has nothing to do with the agenda. This is a bad precedent that you’re setting and a bad precedent for the Senate. It would not have been that difficult to make this an agenda item. The motion,obviously, that was presented here was a motion that was part of the agenda and was done in private, and now we will be doing it in public.
I think it is fairly unprecedented, Mr. Chair, that we would be doing this. I oppose this on principle. If we let this go by, then that means that the majority of any committee can easily put clause by clause on an agenda at any time they wish without giving notice to honourable senators. I think that’s bad form, bad precedent and that’s something the Senate should not be doing.
Senator Tannas: I want to add to Senator Wetston’s comment about this being an important bill. I believe it is, but I also believe that yesterday we did not have the full committee here. There were people who were absent, which kind of flies in the face of the fact that this is an important bill. So I’m glad that everyone is here today.
I intend to associate myself with Senator Tkachuk’s concerns, but I also believe, now that we have everyone here, that view will prevail and we’ll get on with clause by clause on this important bill.
[Translation]
Senator Ringuette: Further to Senator Dagenais’s comments, I want to point out that I have, in front of me, a revised notice of meeting indicating that the committee is to undertake clause-by-clause consideration of the bill today.
Similarly, yesterday, at the last minute, we received a revised notice of meeting indicating that the committee would meet in room 257 of the East Block, instead of room 9 of the Victoria Building, our usual meeting spot. The notice of meeting was revised, and we all accepted the change, as we are all here today.
The revised notice of meeting indicates that the committee is meeting today to undertake clause-by-clause consideration of the bill. I therefore move that we carry on with our work. Thank you.
[English]
Senator Wallin: To reflect those views, I think all we came prepared yesterday to do clause by clause. So we are all at that stage as committee members and we’re prepared to do it. There was a decision yesterday by apparently the majority of the group to change the agenda, so we’re just asking today to change the agenda. I don’t think it is unprecedented. It was “precedented” yesterday. So I think we can make a decision as a group to Senator Dawson’s point. That’s why we’re here.
Senator Stewart Olsen: I associate myself with Senator Tannas’s remarks about a full committee and the importance of being here, especially when we’re considering legislation. I think that’s primary. I also agree that this legislation is important and I think we should pay close attention.
I take Senator Tkachuk’s point about precedent-setting. Perhaps in the motion we could include that, after due consideration, this will not be seen to set a precedent for the future, but because of the special case, time wise, et cetera, we should proceed with the legislation.
Senator Wallin: I have a point of clarification. Do you mean that neither yesterday’s decision nor this decision should be precedent-setting? I’m not sure exactly what you’re saying.
Senator Stewart Olsen: No, it is just today. It is about the agenda not being published. I agree that we should know what we’re coming to. I will not go into that. But thank you for that.
Senator Marwah: Equally, I don’t think yesterday’s agenda indicated there was going to be a motion to defer this to January. If we are going to reflect it, we should reflect both points. To me, this is very important legislation and there is absolutely no reason to defer this to January. We should do clause by clause, get it to the chamber as quickly as possible and proceed from there. I see no reason not to have clause by clause today. In fact, we should have had it yesterday.
Senator Tkachuk: I’d like to respond to what was just said.
First of all, the motion yesterday was part of the agenda. When you do clause by clause, you can move a motion to defeat a particular clause or you can move a motion to push it off to another date. You can do whatever you want. You make the motion, people have a discussion, and you have a vote.
This is different. A quorum is four, and saying that you can just get up here and all of a sudden do clause by clause — the majority can easily do that without telling anybody. We could just have a meeting, a majority of four could get together and do clause by clause and the opposition knows nothing about it. I think that is a dangerous precedent, and we should be well aware of what we’re doing, Mr. Chair.
The Chair: I understand, and you’ve made that point, Senator Tkachuk.
Senator Tkachuk: I am going to continue to make it.
Senator Dawson: Again, I’m new to the committee, but I was under the impression an incident occurred yesterday and a revision of the agenda was made. So the precedent of changing agendas —
The Chair: Senator Dawson has the floor.
Senator Dawson: I’m ready to move on the motion if you want.
Senator Unger: I would like to associate my comments with what Senator Tkachuk has said. I came to the meeting last night with my big thick bill, ready to proceed to clause by clause. Then, due to quorum, or lack thereof, the meeting did not proceed.
The Chair: I’m going to call the question on this point. Do we need the motion read again or not?
Senator Marwah: Notwithstanding the motion adopted by the committee yesterday, I move that the Standing Senate Committee on Banking, Trade and Commerce now proceed to clause by clause of Bill C-25, An Act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act, and the Competition Act.
The Chair: Thank you very much. And that has been seconded.
All in favour of the motion?
Some Hon. Senators: Yea.
The Chair: Opposed?
Some Hon. Senators: Nay.
An Hon. Senator: On division.
The Chair: On division. Very well.
We are now at the stage where we will go through the bill clause by clause. I would like to remind senators that if at any time a senator is not clear where we are in the process, please do not hesitate to ask for clarification. I want to ensure that at all times we have the same understanding of where we are in the process.
Before we begin, I would like to remind senators of a few points of mechanics.
When more than one amendment is proposed to be moved in a clause, amendments should be proposed in the order of the lines of a clause.
Some amendments that are moved may have consequential effects on other parts of the bill. We will endeavour to keep track of these places where subsequent amendments need to be moved and draw your attention to them if necessary.
Although no notice is required to move amendments, should amendments be moved this morning with no notice, please keep in mind that senators may not be aware of these amendments. So if any member wishes to propose an amendment, please allow your colleagues and staff sufficient time to review them before opening the floor for debate.
Finally, I wish to remind senators that if there is ever any uncertainty as to the results of a voice vote or show of hands, the most effective route is to request a roll call vote, which obviously provides unambiguous results.
Senators should know that any tied vote negates the motion in question.
If there no questions on the above, we will proceed.
Senators, shall the title stand postponed?
Hon. Senators: Agreed.
The Chair: Carried.
In order to be more efficient, would all senators be in agreement to group some clauses in the bill together?
Hon. Senators: Agreed.
Senator Tkachuk: It depends on how many you’re grouping.
The Chair: I’m looking at the groupings now. It’s 1 to 12, 13 and 14 to 23. We’ll take all the time we need to make sure this is thorough and clear. So that is agreed.
Shall clauses 1 to 12 carry?
Hon. Senators: Agreed.
The Chair: I understand Senator Wetston has an amendment to clause 13?
Senator Wetston: Thank you. I move:
That Bill C-25 be amended in clause 13, on page 5,
(a) by replacing line 31 with the following:
“(6) Despite subsections (2), (3) to (3.2) and (5) and subject to subsection (6.1), if direc-”; and
(b) by adding the following after line 34:
"(6.1) If an incumbent director who was a candidate in an election held in accordance with subsection (3.4) was not elected during the election, the director may continue in office until the earlier of
(a) the 90th day after the day of the election; and
(b) the day on which their successor is appointed or elected.".
Senator Tkachuk: Can you explain why you want that amendment?
Senator Wetston: Of course. The amendment is intended to mitigate the risk that the majority voting requirement in the bill would result in sudden and unexpected disruptions in the corporate decision-making culture for the board, or that the board be inadvertently paralyzed to continue to do its work. It provides a specific grace period for candidate directors who are not successful because of the application of the majority voting provision. This grace period would be up to 90 days from the date of the election.
The purpose of that, senator, is to allow the board a time in which another director can be appointed to the position. In particular, this matter was brought to our attention by a number of corporate lawyers and witnesses because they felt that would be less disruptive of the operations of the board.
I might say that the act, however, already contains a number of provisions to deal with serious matters of not having quorum; for example, quorum failure or broader failed elections. This really only deals with the issue of whether or not a director is not elected in the majority voting model and gives the board the opportunity to replace that director.
The Chair: Senator Stewart Olsen, you had a comment or a question?
Senator Stewart Olsen: Just a comment.
You did mention that several witnesses brought to our attention the difficulty that corporations would have to replace someone as quickly as the 30 days. Thank you for that. I just wanted to make that comment.
Senator Marwah: I just think it’s a good business practice so that when the director fails a majority voting test, there is some period of time so the board can find a replacement and you don’t paralyze the board because of lack of quorum or many other instances on committees. This allows a 90-day grace period in order to find a replacement. If you find a replacement before the 90 days, you don’t need the 90 days, so I think that makes sense.
Senator Tkachuk: Just so I’m clear, we’re going to move this amendment. Do you plan to bring this bill, then, to the chamber right after?
The Chair: This afternoon, if we can.
Senator Tkachuk: The House of Commons is gone; is that right?
The Chair: Right.
Senator Tkachuk: So this bill won’t be able to be passed until February when they come back.
The Chair: I just think it’s very important that this committee do our job.
Senator Tkachuk: Thank you. I just asked.
The Chair: In respect of Senator Wetston’s amendment, carried?
Hon. Senators: Carried.
The Chair: Shall clause 13 carry, as amended?
It has been carried.
Shall clauses 14 to 23 carry?
There is no rush, Senator Tkachuk.
Hon. Senators: Agreed.
The Chair: I understand Senator Wetston has an amendment to clause 24?
Senator Wetston: That’s correct. I’d like to bring the committee’s attention to clause 24, page 10 of the bill. I move:
That Bill C-25 be amended in clause 24, on page 10,
(a) by replacing lines 3 to 5 with the following:
“(2) The corporation shall provide the information referred to in subsection (1) to each shareholder, except to a share-”; and
(b) by replacing lines 7 to 9 with the following:
"they do not want to receive that information, by sending the information along with the notice referred to in subsection 135(1) or by making the information available along with a proxy circular referred to in subsection 150(1).
(3) The corporation shall concurrently send the information referred to in subsection (1) to the Director.".
The Chair: Thank you, Senator Wetston. Perhaps you would give a quick explanation to the committee of the purpose of the amendment.
Senator Wetston: It should be known that a number of years ago, the CSA, Canadian Securities Administrators, adopted more modern notice and access requirements, the bottom line being that certain proxy circulars and information can be provided by way of the Internet.
The purpose of this amendment would require directors of a prescribed corporation — for example, TSX companies — to place before the shareholders at every annual meeting the prescribed information respecting diversity among the directors and among the members of senior management. This provision obviously is Part XIV.1, disclosure relating to diversity.
The amendment will ensure that the CBCA reflects modern ways of communicating information to shareholders and that it continues to support innovation and economic growth. This particular amendment will allow a corporation to send the diversity information to shareholders not only along with the notice of the shareholder meeting, which they can do, but also by making the information available along with a proxy circular referred to subsection 150(1).
The proposed amendment allows the corporation to choose the time in which they wish to send the diversity information, either at the time of the sending of the notice of a meeting, which they can do online, or with the sending of the proxy circular, which is a more ambitious document.
The purpose of this amendment is to ensure that this information on diversity is also included with the other information that would be within the proxy circular.
Senator Stewart Olsen: Thank you, Senator Wetston.
Would you anticipate that this information would cause hardship to corporations? Are they compiling it already? Or would you anticipate that it may be a cost factor or would cause problems for them?
Senator Wetston: No. It’s just additional diversity information that they’re required, under the statute, to prepare and present to shareholders as part of the new diversity information under the CBCA. This is already done.
Senator Stewart Olsen: This is an additional step?
Senator Wetston: This is already done under the notice and access requirements of the Canadian Securities Administrators and the securities requirements with respect to “comply or explain” and gender diversity. It is already done in that environment. This is ensuring that, under the CBCA amendment with respect to diversity information, that information is also permitted to be sent to shareholders by way of the Internet. Basically it will reduce the costs. It will be a more efficient and effective way to communicate with shareholders. It’s just additional information that would be included in the proxy circular, which they are mandated to do. If they didn’t do it this way, they would have to send it in paper form.
Senator Tkachuk: They don’t have that option now.
Senator Ringuette: I find it logical in asking your shareholders to vote for a new director via proxy, at least they are informed of the policy.
Senator Wetston: Had this amendment not occurred, they would still have to send the information, but they would send it in that envelope that you don’t open up or acknowledge when you get it.
The Chair: Shall the amendment carry?
Hon. Senators: Agreed.
The Chair: Shall clause 24 carry, as amended?
Hon. Senators: Agreed.
The Chair: Carried.
The Chair: Shall clauses 25 to 58 carry?
Hon. Senators: Agreed.
The Chair: I understand Senator Wetston has an amendment to clause 59.
Senator Wetston: I move an amendment to Bill C-25, clause 59, page 20. This forms part of the amendments associated with the Canada Cooperatives Act. I move:
That Bill C-25 be amended in clause 59, on page 20, by adding the following after line 37:
"(10.2) Despite subsection (3) and paragraph 84(1)(b), if an incumbent director who was a candidate in an election held in accordance with subsection (10.1) was not elected during the election, the director may continue in office until the earlier of:
(a) the 90th day after the day of the election; and
(b) the day on which their successor is appointed or elected.".
Again, this deals with the Canada Cooperatives Act. The other provisions deal with the CBCA, the Canada Business Corporations Act.
The requirement is for majority voting under this regime as well. It also provides the same grace period for a director who was not successful, once again because of the application of majority voting. The grace period would be up to 90 days from the date of the election.
Section 83 of the Canada Cooperatives Act deals with the terms of office, similar but different provisions, dealing with CBCA majority voting. It’s just to continue to ensure the grace period is available for those particular boards as well.
The Chair: Any comments?
Shall the amendment carry?
Hon. Senators: Agreed.
The Chair: Shall clause 59 carry, as amended.
Hon. Senators: Agreed.
The Chair: Carried.
Shall clauses 60 to 124 carry, which is the balance of the bill?
Hon. Senators: Agreed.
The Chair: Carried.
Shall the title carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall the bill, as amended, carry?
Hon. Senators: Agreed.
The Chair: Carried.
Is it agreed that I report this bill, as amended, to the Senate?
Hon. Senators: Agreed.
The Chair: Carried.
Thank you, senators.
(The committee adjourned.)