Canadian Lawyer

52 J A N U A R Y 2 0 1 7 w w w . C A N A D I A N L a w y e r m a g . c o m ill C-25, which passed sec- ond reading in October, is expected to update legisla- tion that last had an over- haul in 2001. The amend- ments to the CBCA con- tained in the bill would modernize Canada's legal and regulatory framework for nearly 270,000 federally incorpo- rated corporations, though the proposed changes would affect only those that issue stocks and report to a securities commission. Most of the proposed amendments are not surprising, or radical: mandatory diversity reporting, for one, which is con- sistent with requirements for TSX-listed companies, and which many companies have already adopted. As well, publicly listed companies would be required to hold annual elections, and elect directors individually rather than by slate voting. But there's consternation about others, including a proposed new rule on major- ity voting. And although the revisions were developed from a call for consultations initiated in 2013, observers say the pro- posed changes are narrower than what they could have been given the input it received. "My concerns are more for what's not there," says Gary Solway, a partner at Ben- nett Jones LLP in Toronto. "The diversity reporting, majority voting and other tech- nical amendments are closer to housekeep- ing than bold new initiatives." Of the many submissions the govern- ment received, and over a wide variety of topics, "very little is in this act," he adds. "It kind of feels like . . . an administrative bill as opposed to a bold new direction or massive modernization of our corporate legislation. "The government has said there's more to come, and that's what I think people are waiting for." Majority voting There are "not momentous changes" in the bill, agrees Franziska Ruf of Davies Ward Phillips & Vineberg in Montreal. However, the most significant, she says, is the new majority voting requirement. This would require that votes be cast "for" or "against" individual directors, who must receive a majority of votes in favour of their election when the number of candidates is the same as the number of positions to be filled. Currently, shareholders vote for a director, or withhold their vote; if there were more "withhelds" than "for" votes for a director, "the TSX required that person to tender resignation . . . but the board at least had the ability to consider whether to accept that resignation now, or ever, and for what reasons," says Ruf. "With the new [pro- posed] rules, if there's more 'against' than 'for,' there's not much you can do about it." Andrew MacDougall, a partner in Osler Hoskin & Harcourt LLP in Toronto, regrets the loss of dialogue that would ensue if the majority voting amendment were to pass. If a director failed to receive a majority of "for" votes, he says, there's no need L E G A L R E P O RT \ C O R P O R AT E HUAN TRAN The Canada Business Corporations Act is about to get a facelift By Elizabeth Raymer Modernizing federal corporate law B

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