S-235
Second Session, Fortieth Parliament,
57-58 Elizabeth II, 2009
SENATE OF CANADA
BILL S-235
An Act to provide the means to rationalize the governance of Canadian businesses during the period of national emergency resulting from the global financial crisis that is undermining Canada’s economic stability
first reading, May 12, 2009
THE HONOURABLE SENATOR HERVIEUX-PAYETTE, P.C.
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SUMMARY
This enactment imposes limits on the remuneration that Canadian business companies receiving emergency financial relief from the federal authorities may pay to their officers and prohibits these companies from paying dividends to their shareholders. It also imposes restrictions on business corporations incorporated federally in respect of the remuneration they may pay to their officers and directors and the benefits they may grant to them.
Available on the Parliament of Canada Web Site at the following address:http://www.parl.gc.ca
2nd Session, 40th Parliament,
57-58 Elizabeth II, 2009
senate of canada
BILL S-235
An Act to provide the means to rationalize the governance of Canadian businesses during the period of national emergency resulting from the global financial crisis that is undermining Canada’s economic stability
Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
SHORT TITLE
Short title
1. This Act may be cited as the Governance of Canadian Businesses Emergency Act, 2009.
INTERPRETATION
Definitions
2. The following definitions apply in this Act.
“body corporate”« personne morale »
“body corporate” means an incorporated body wherever or however incorporated.
“individual”« particulier »
“individual” means a natural person.
PART 1
EMERGENCY MEASURES — GOVERNANCE OF RECIPIENT COMPANIES
Interpretation and Application
Definitions
3. The following definitions apply in this Part.
“debt obligation”« titre de créance »
“debt obligation” means a bond, debenture, note or other evidence of indebtedness of a recipient company, whether secured or unsecured, and includes a bond, debenture, promissory note or other form of guarantee given to the company by a federal institution.
“financial assistance”« aide financière »
“financial assistance” means any form of financial relief granted to a recipient company pursuant to
(a) the budget tabled in Parliament on January 27, 2009;
(b) the Budget Implementation Act, 2009; or
(c) any other short-term financial assistance program administered by the federal government or a federal institution in response to the financial crisis that has existed since 2008.
“Minister”« ministre »
“Minister” means the Minister of Finance.
“officer”« dirigeant »
“officer” means an individual who occupies a management position in a recipient company and includes the president, vice-president, secretary, treasurer, comptroller, general counsel and general manager.
“recipient company”« entreprise bénéficiare »
“recipient company” means any body corporate that operates in one of the key sectors of the economy — including the financial services industry, forestry industry, agri-food industry, shipbuilding industry, auto industry or aerospace industry — and that receives financial assistance.
“relief period”« période de redressement »
“relief period” means the term to which a form of financial assistance is subject, including the period for repayment of a loan made to a recipient company, the period during which the repayment of a loan extended by the recipient company is guaranteed, or the period for the recipient company to repurchase those of its shares acquired by the Minister or a federal institution.
“security”« titre »
“security” means, in relation to a recipient company, a share, a class of shares or a debt obligation of the company, and includes any conversion or exchange privilege, option or other right to acquire a share of the company.
Application
4. (1) This Part applies to any recipient company during its relief period.
Public corporations
(2) For greater certainty, this Part applies to any public corporation — within the meaning of Part 2 — that is a recipient company.
Conflict
(3) In the event of a conflict, the provisions of Part 1 prevail over those of Part 2.
Remuneration Cap
Officers subject to the cap
5. The number of officers of a recipient company that are subject to the caps provided for in sections 6 and 7 is calculated based on the amount of financial assistance received by the company:
(a) from twenty-five million to less than two hundred fifty million dollars, the five most highly remunerated;
(b) from two hundred and fifty million to less than one billion dollars, the ten most highly remunerated; and
(c) over one billion dollars, the twenty most highly remunerated.
Salary cap
6. The recipient company may not pay any of its officers an annual salary greater than five hundred thousand dollars.
Bonus cap
7. (1) The recipient company may not pay any of its officers, for any fiscal year, a bonus greater than a third of that officer’s annual salary.
Restricted shares
(2) A bonus is payable only in the form of shares of the recipient company that are restricted as to their transfer.
Transfer
(3) Any officer who acquires the restricted shares referred to in this section may not transfer them before the end of the relief period of the company.
Dividends
Prohibition
8. The recipient company may not pay any dividend to its shareholders.
PART 2
PERMANENT MEASURES — GOVERNANCE OF PUBLIC CORPORATIONS
Interpretation
Definitions
9. The following definitions apply in this Part.
“board of directors”« conseil d’administration »
“board of directors” means all the directors of a public corporation.
“corporation”« société »
“corporation” means
(a) a body corporate incorporated or continued under the Canada Business Corporations Act;
(b) a bank governed by the Bank Act;
(c) a body corporate governed by the Trust and Loan Companies Act;
(d) an association governed by the Cooperative Credit Associations Act; or
(e) an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act.
“director”« administrateur »
“director” means a natural person who is a member of the board of directors of a public corporation.
“officer”« dirigeant »
“officer” means the president, vice-president, secretary, treasurer, comptroller, general counsel, general manager or managing director of a public corporation, or any other individual who performs functions similar to those normally performed by an individual occupying any of those offices.
“public corporation”« société publique »
“public corporation” means a distributing corporation whose securities are listed and posted for trading on a recognized stock exchange in Canada or elsewhere.
Board of Directors
Restriction
10. No individual may sit on the board of directors of more than four public corporations.
Remuneration
11. A public corporation shall remunerate its directors by paying a sum of money composed of the directors’ annual fees and directors’ fees for attendance at meetings of the corporation’s board of directors.
Financial investment
12. (1) Every director of a public corporation is required to invest a sum of money, in the form of common shares, equivalent to three times the annual remuneration he or she is paid by the corporation.
Coming into effect
(2) Subsection (1) becomes effective one year after this section comes into force.
Purchase options or rights
13. Public corporations may not grant share purchase options or rights to their directors.
Remuneration committee
14. (1) The board of directors of a public corporation shall constitute a remuneration committee responsible for preparing a plan setting out the principles and structures for the remuneration of its directors and officers.
Coming into effect
(2) The remuneration plan shall become effective after it is submitted to the shareholders of the corporation and after it has been the subject of an advisory vote by an assembly of the shareholders.
Officers
Definition of “total remuneration”
15. (1) For the purposes of this section, “total remuneration” means the salary, for a fiscal year, that a public corporation pays to one of its officers and the benefits, within the meaning of subsection 16(1), that it grants to the officer.
Remuneration
(2) The remuneration committee of the corporation shall determine the total remuneration of each ot its officers based on the following criteria:
(a) the amount of that remuneration may not be more than 20 times greater than the annual average industrial wage in Canada, as calculated by Statistics Canada; and
(b) the book value of the corporation for the current fiscal year compared to its book value for the preceding fiscal year.
Definition of “benefits” — officers
16. (1) In this section, “benefits” means the expenses incurred by a public corporation during a fiscal year for the professional training of its officers, for the payment to those officers of reasonable performance incentives or for the allocation to its officers of any other similar benefits directly linked to the normal activities of the corporation.
Aggregate value of benefits
(2) The remuneration committee, in order to ensure that its decision protects the interests of the shareholders of the corporation and does not adversely affect its long-term profitability, shall determine the aggregate value of the benefits, other than salary, that the corporation grants its officers based on its financial situation during the current fiscal year compared with its financial situation during the preceding fiscal year.
Liquidation
(3) No officer of the corporation may liquidate any of those benefits that may be converted into cash at a date that is less than three years from the date on which the benefits were awarded.
Reports
Financial statements
17. Every public corporation shall include in its financial statements the amount paid to each officer as retirement benefits.
Definition of “benefits” — directors
18. (1) In this section, “benefits” means the benefits, other than the remuneration described in section 11, granted by a public corporation during a fiscal year in the form of
(a) the use of its motor vehicles or aircraft;
(b) expenses incurred by it for
(i) living and travel expenses, including to attend congresses, symposiums, conferences, seminars, reunions or meetings, and
(ii) entertainment expenses for meals, drink or entertainment; and
(c) personal benefits in the form of loans, advances, gifts, insurance or medical care.
Annual report
(2) Every public corporation shall include in the annual report that it submits to its shareholders a statement of the benefits provided to its directors during the fiscal year.
Details
(3) The statement shall include
(a) a detailed list of the benefits provided to each of its directors; and
(b) a mention of the cash value of each of these benefits.
PART 3
GENERAL PROVISIONS
Enforcement
Offences: individuals
19. Every individual who contravenes subsection 7(3), section 10 or subsection 12(1) or 16(3) is guilty of an offence and liable on summary conviction to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding six months, or to both.
Offences: corporations
20. Every body corporate that contravenes section 6, subsection 7(1) or (2), section 8, 13 or 17, subsection 18(2) or paragraph 18(3)(a) or (b) is guilty of an offence and liable on summary conviction to a fine not exceeding five hundred thousand dollars.
Coming Into Force
Coming into force
21. This Act or any of its provisions comes into force on a day or days to be fixed by order of the Governor in Council.
Published under authority of the Senate of Canada