Canada sets diversity targets

Canada has recently proposed new amendments to its federal corporate governance framework in its Economic Action Plan 2015.

The government has outlined plans to increase women’s participation in corporate leadership, improve shareholder democracy and communications, strengthen corporate transparency and reduce the regulatory burden on Canadian businesses.

Recognising that increasing opportunities for women to serve on corporate boards and in leadership roles makes good business sense, the government has proposed amendments to the Canada Business Corporations Act to promote gender diversity among public companies. It will do this using the widely recognised “comply or explain” model of disclosure currently required for TSX-listed companies and by most provincial securities regulators.

Amendments will also be proposed to modernise director election processes and communications with shareholders and to strengthen corporate transparency through an explicit ban on bearer instruments, a type of fixed-income security through which the identity of the owner can be concealed. Amendments to related statutes governing co-operatives and not-for-profit corporations will also be introduced to ensure continued alignment among federal laws.

The announcement follows the Australian Institute of Company Directors’ (AICD’s) recent diversity announcement, which recommended voluntary targets, rather than mandated quotas, for all S&P/ASX 200 boards to ensure that 30 per cent of their directors are female by the end of 2018.

Canada’s moves also follow Germany which passed a law in March forcing 100 of the country's top companies to have at least 30 per cent of board seats held by women by January next year.