Short Title
Interpretation
Board of Directors
Officers
Reports
Enforcement
Coming into Force
First Session, Forty-second Parliament,
64 Elizabeth II, 2015-2016
SENATE OF CANADA
BILL S-216
An Act to provide the means to rationalize the governance of Canadian public corporations
FIRST READING, JANUARY 26, 2016
THE HONOURABLE SENATOR HERVIEUX-PAYETTE, P.C.
4210838
SUMMARY
This enactment limits the cumulative period that an individual may sit on the board of directors of a Canadian public corporation to 96 months and prohibits an individual from sitting on the board of more than four Canadian public corporations at the same time. It also places strict limits on the remuneration these corporations may pay their officers and directors and the benefits they may grant in connection with their functions.
Available on the Parliament of Canada Web Site at the following address:
http://www.parl.gc.ca
1st Session, 42nd Parliament, 
64 Elizabeth II, 2015-2016
SENATE OF CANADA
BILL S-216
An Act to provide the means to rationalize the governance of Canadian public corporations
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 Canadian Public Corporations Governance Act.
Interpretation
Definitions
2 The following definitions apply in this Act.
board of directors means all the directors of a public corporation. (conseil d’administration)
body corporate means an incorporated body wherever or however incorporated. (personne morale)
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. (société)
director means an individual who is a member of the board of directors of a public corporation. (administrateur)
family member, in relation to an individual, means
(a) a spouse or common-law partner of the individual;
(b) a child of the individual or a child of the individual’s spouse or common-law partner; and
(c) a parent of the individual or a spouse or common-law partner of the parent. (membre de la famille)
individual means a natural person. (particulier)
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. (dirigeant)
public corporation means a corporation that is a distributing corporation whose securities are listed and posted for trading on a recognized stock exchange in Canada or elsewhere. (société publique)
Board of Directors
Restriction
3 (1) No individual may sit on the board of directors of more than four public corporations at the same time.
Incapacity
(2) No individual who is already sitting on the board of directors of four public corporations may be appointed to another board of directors.
Term of office
4 (1) No individual may sit on the board of directors of a public corporation for a cumulative period of more than 96 months.
Ceasing to hold office
(2) A director ceases to hold office when he or she becomes disqualified under subsection (1).
Exception
(3) Subsections (1) and (2) do not apply to an individual who was a director of the corporation at the time of its incorporation or became one within one year after that date.
(4) Subsections (1) and (2) do not apply to an individual if that individual or members of that individual’s family, or the entities they control, beneficially own securities carrying more than 50% of the voting rights attached to all of the securities of the public corporation.
Remuneration
5 A public corporation must 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
6 (1) Every director of a public corporation must 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
7 A public corporation must not grant share purchase options or rights to their directors.
Remuneration committee
8 (1) The board of directors of a public corporation must constitute a remuneration committee responsible for preparing a plan setting out the principles and structure for the remuneration of the corporation’s directors and officers.
Coming into effect
(2) The remuneration plan becomes effective after it is submitted to the shareholders of the public corporation and after it has been the subject of an advisory vote by an assembly of the shareholders.
Officers
Definition of total remuneration
9 (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 10(1), that it grants to the officer.
Remuneration
(2) The remuneration committee of the public corporation must determine the total remuneration of each of its officers based on the following criteria:
(a) the amount of that remuneration must not be more than 20 times greater than the annual average wage of the corporation; 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
10 (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 public corporation and does not adversely affect its long-term profitability, must 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 public 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.
Termination pay and severance pay
11 A public corporation must not grant termination pay, severance pay or any other related payment related to the termination of an officer in an amount that, in aggregate, exceeds twice the amount of his or her total remuneration as defined in subsection 9(1).
Reports
Financial statements
12 Every public corporation must include in its financial statements the amount paid during the fiscal year to each of its officers as retirement benefits.
Definition of benefits — directors
13 (1) In this section, benefits means the benefits, other than the remuneration described in section 5, 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 expenses to attend congresses, symposiums, conferences, seminars, reunions or meetings, and
(ii) entertainment expenses for meals, drinks or entertainment; and
(c) personal benefits in the form of loans, advances, gifts, insurance or medical care.
Annual report
(2) Every public corporation must 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 must 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.
Enforcement
Offences: individuals
14 Every individual who contravenes section 3 or subsection 4(1), 6(1) or 10(3) is guilty of an offence and liable on summary conviction to a fine not exceeding $100,000.
Offences: corporations
15 Every corporation that contravenes section 7, 11, 12, or 13 is guilty of an offence and liable on summary conviction to a fine not exceeding $500,000.
Coming into Force
Order in Council
16 The provisions of this Act come 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