On April 7, 2021, Corporations Canada published Diversity of Boards of Directors and Senior Management of Federal Distributing Corporations (Report). The Report is the first annual review of “comply or explain” disclosure provided by federal distributing corporations (generally, public companies and including venture and non-venture issuers) concerning diversity of their boards of directors and senior management pursuant to the Canada Business Corporations Act (CBCA).
The Report follows the implementation 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, which among other things, resulted in the CBCA requiring federal distributing corporations governed by the CBCA to provide in their proxy circulars for annual meetings of shareholders held on or after January 1, 2020, information about the representation of women, Indigenous peoples (First Nations, Inuit and Métis), persons with disabilities and members of visible minorities on their boards of directors and among senior management. For more information on the CBCA diversity disclosure requirements, see our July 2019 Blakes Bulletin: Additional Diversity Disclosure Required of CBCA Corporations in 2020.
While the CBCA and related regulations set out the disclosure requirements, they do not specify how distributing corporations should disclose this information. The Report notes that this lack of standardization, combined with other challenges such as incomplete, missing or unclear information, and the fact that some individuals may be reluctant to self-identify as members of a designated group, make it difficult to compile accurate representation statistics. Further, not all applicable corporations that provided responsive disclosure filed their proxy circulars with Corporations Canada, either by mistakenly only filing the circulars with the System for Electronic Document Analysis and Retrieval (SEDAR) or due to technical difficulties in accessing Corporations Canada’s Online Filing Centre.
To assist with the process of data collection, Corporations Canada has published guidelines to encourage distributing corporations to disclose their diversity information annually in a more consistent manner. Additionally, to make sure the process is more effective in 2021, Corporations Canada has committed to continuing to reach out to distributing corporations to inform and remind them of their obligations and how to meet such obligations.
FIRST YEAR REVIEW RESULTS
The Report is the first annual review of compliance with the CBCA diversity disclosure requirements. In total, 469 distributing corporations filed proxy circulars between January 1, 2020 and December 31, 2020. Of the proxy circulars reviewed, 85.9 per cent of distributing corporations complied with the requirement to provide diversity disclosure, with venture issuers comprising 80.3 per cent of the non-compliant issuers. Within this population of Canadian public companies, the Report noted the following findings, which will serve as benchmarks against which Corporations Canada will assess progress in the future:
Women held 17 per cent of board seats (and comprise 52.7 per cent of the Canadian population available to work) and members of visible minorities held four per cent (and comprise 15.3 per cent of the Canadian population available to work), while persons with disabilities and Indigenous persons each held 0.3 per cent (and comprise nine per cent and four per cent, respectively, of the Canadian population available to work)
Women held 25 per cent of senior management positions, members of visible minorities held nine per cent, persons with disabilities held 0.6 per cent and Indigenous persons held 0.2 per cent
Approximately 60.2 per cent of issuers that properly reported had at least one woman on their board of directors, approximately 21.9 per cent had at least one member of a visible minority, approximately 2.3 per cent had at least one person with disabilities and approximately 2.3 per cent had at least one Indigenous person
Approximately 58.8 per cent of issuers that properly reported had at least one woman in their senior management team, approximately 31.5 per cent of issuers had at least one member of a visible minority, approximately three per cent had at least one person with disabilities and approximately 1.6 per cent had at least one Indigenous person
Approximately 16.5 per cent of issuers that properly reported had set targets for the representation of women on their boards, approximately 1.5 per cent had for members of visible minorities, approximately 1.3 per cent had for persons with disabilities and approximately 1.3 per cent had for Indigenous persons
Approximately 6.6 per cent of issuers that properly reported had set targets for the representation of women in senior management positions, approximately 1.3 per cent had for members of visible minorities, approximately 0.3 per cent had for persons with disabilities and approximately 0.4 per cent had for Indigenous persons.
Corporations Canada has noted that the first year’s findings set out in the Report “clearly show a disparity in the representation of designated groups on boards of directors and among senior management” which is “in contrast to the diversity of the Canadian population available to work”. Corporations Canada has stated that it will continue its review of diversity information disclosed by federal distributing corporations and intends to publish a second-year review in 2021 and onwards to identify trends and monitor progress on the representation of women, Indigenous peoples, persons with disabilities and members of visible minorities on boards of directors and senior management teams.
For further information, please contact:
Stacy McLean 416-863-4325
Matthew Merkley 416-863-3328
Kelsey Park 416-863-3255
or any other member of our Corporate Governance group.
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