Industry Canada, a department of the nation’s government that works to improve conditions for investment and create an efficient and competitive marketplace, is conducting public consultations on the Canada Business Corporations Act (CBCA). Specifically, Industry Canada is focusing on matters such as executive compensation, corporate transparency, combating bribery and corruption and fostering corporate social responsibility, among others, to help provide standards in the corporate governance of businesses of all sizes.
The consultation was announced on December 11 by the Honourable James Moore of the Department of Industry, noting that although the World Bank has deemed Canada third out of 185 economies for a regulatory environment that is conducive to starting and operating a business, improvements in regulatory compliance can always be made.
In the area of corporate transparency, Industry Canada notes that more could be done in terms of letting competent authorities know about the identities of shareholders and whether a nominated entity is acting on behalf of beneficial owners.
In terms of tackling bribery and corruption, Canada is a signatory to the Organisation for Economic Co-operation and Development’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The CBCA itself requires the maintenance of all minutes of meetings among shareholders and directors, disclosure to shareholders of annual financial statements, and the appointment of independent auditors. Industry Canada invites commentary on the adequacy of these requirements in being able to combat bribery in international transactions.
The ideas presented in the consultation announcement and its requests for input are impressive, but are the questions and thoughts shared in the consultation process going to resonate with the businesses most in need of the guidance?
I posed this question to Kim Manchester, managing director of ManchesterCF Consulting Co. in Toronto. His response was a qualified ‘yes.’
‘The Canadians, like many others, have good intentions when it comes to ensuring more corporate transparency. Revealing such details as beneficial ownership, shareholder registries and corporate transactions is good for Canadian companies and investors,’ he said. ‘The problem is getting such information from international corporations operating out of offshore financial havens. We need to ensure that those controlling such institutions cannot run around our efforts at corporate transparency.’
As the authors note in the introduction to the consultation document, the CBCA came into force in 1975, and the world’s economy has become increasingly competitive and cross-border. Although the CBCA has updated its framework to keep pace, the need to constantly monitor the corporate governance rules cannot be understated. That goes for all of Canada’s corporations, regardless of where they are situated and with which governments they are interacting.
Julie DiMauro is the executive editor of FCPA Blog and can be reached here.