Introduction

Corporate governance in Canada continues to evolve. Diversity continues to be a focus of regulatory and proxy advisory policy change, and for boards, is a key component of ESG concerns. The adoption of majority voting in the Canada Business Corporations Act (CBCA) strengthens shareholders’ hands at shareholder meetings. The introduction of legislation governing disclosure of beneficial ownership of company shares, as well as certain other matters not previously subject to mandatory disclosure, are showing a trend towards increased transparency. Climate change is another core aspect of ESG concerns at the board level. Proposed climate-related disclosure rules will entail very significant changes to corporate governance that will require boards of directors to undertake a comprehensive review of the corporation’s governance structures and practices. Changes continue to be made to corporate statutes to remove perceived technical burdens. Stakeholders will look for more oversight from the board as adoption of generative artificial intelligence (AI) continues to grow exponentially.

Diversity – Boards and Senior Management

Diversity on boards and in senior management is being reviewed by corporate regulators and stakeholders, and the legal and “soft law” requirements have and are continuing to evolve. Since 2014, Toronto Stock Exchange (TSX)-listed corporations have been required to make diversity-related disclosure in their annual disclosure documents on a “comply or explain” basis, including:

• on their policies and targets regarding the representation of women on the board of directors and in executive positions;
• how the representation of women is considered in selecting board and executive officer candidates; 
• gender representation on the board and in executive officer positions; and
• term limits.

See National Instrument 58-101 of the Canadian Securities Administrators (CSA) Disclosure of Corporate Governance Practices (NI 58-101).

Public corporations existing under the CBCA have been required to make diversity-related disclosure regarding women, indigenous peoples, persons with disabilities and members of visible minorities (designated groups) since 2020 on a “comply or explain” basis. These requirements include:

• disclosure of term limits or other board renewal mechanisms, a description of written diversity policies for the selection of individuals from designated groups as board nominees and a description of progress made in achieving the policy objectives;
• whether the level of representation of designated groups on the board or in senior management is considered in appointing new candidates;
• whether targets have been established for representation of designated groups on the board and in senior management, as well as progress towards those targets; and
• the number of members of each of the designated groups on the board and in senior management.

Enhanced guidelines for making this disclosure were published by Corporations Canada in February 2022.

Increasingly, governance ratings organisations and industry groups developing “best practices” are focusing on gender and other diversity measures as critical elements of measuring/rating corporate governance. See, for example, the Canadian Coalition for Good Governance (CCGG) and The Globe and Mail Board Games.

Proxy advisory firms are following suit, with both Glass, Lewis & Co (Glass Lewis) and Institutional Shareholder Services (ISS) adopting gender diversity policies in respect of Canadian public corporations (regardless of jurisdiction of incorporation). 

Glass Lewis has updated its voting policies with respect to board gender diversity effective for shareholder meetings on or after 1 January 2025, as set out below. 

• Glass Lewis maintains a percentage-based approach to board gender diversity and will generally recommend voting against the nominating committee chair of any TSX-listed company board that is not at least 30% gender diverse, as well as all members of the nominating committee of a board with no gender diverse directors. Glass Lewis defines “gender diverse directors” as women and directors that identify with a gender other than male or female. 
• For companies listed on junior exchanges, Glass Lewis’ minimum threshold remains at one gender diverse director.
• Glass Lewis may refrain from recommending that shareholders vote against the election of directors of companies when boards have provided a sufficient rationale or plan to address the lack of diversity on the board. 

Beginning with shareholder meetings held after 1 February 2025, the ISS voting guidelines have changed as follows.

• ISS will recommend against the election of the chair of the nominating committee, or its equivalent, of a company listed on the S&P/TSX Composite Index with less than 30% representation of women on its board of directors.
• ISS has amended one of the exceptions to the requirement that boards of S&P/TSX Composite Index issuers be comprised of at least 30% women. Assuming there is a publicly disclosed written commitment to achieve 30% representation of women on the board at or before the subsequent annual general meeting (AGM), an exception will be made for companies that have fallen below the 30% threshold after achieving such level at the preceding AGM.
• Previously, companies could only take advantage of this exemption if they fell below the 30% threshold due to an extraordinary circumstance. ISS has now removed the reference to “extraordinary circumstances”.
• For TSX-listed companies which are not also included in the S&P/TSX Composite Index, ISS will generally vote against the election of the chair of the nominating committee, or its equivalent, if there are zero women on the board of directors. 

In 2024, ISS broadened its policy on diversity beyond gender to include requirements for racially and/or ethnically diverse board members (defined as Aboriginal peoples, meaning persons who are indigenous, Inuit or Métis, and members of visible minorities, meaning persons other than Aboriginal peoples, who are non-Caucasian in race or non-white in colour).

For meetings on or after 1 February 2025, for companies in the S&P/TSX Composite Index, ISS continues to recommend to vote against or withhold from the Chair of the Nominating Committee or Chair of the committee designated with the responsibility of a nominating committee, or the Chair of the board of directors if no nominating committee has been identified or no chair of such committee has been identified, where the board has no apparent racially or ethnically diverse members. If the board has provided a formal, publicly disclosed written commitment to add at least one racially or ethnically diverse director at or prior to the next annual meeting, an exemption will be made for companies that have:

• joined the S&P/TSX Composite Index and were not previously subject to the racial/ethnic board requirement at the previous AGM; or
• fallen below the minimum racial or ethnic representation on the board after achieving such level of representation at the previous AGM.

Federally-incorporated issuers are required to report on diversity among the “members of senior management” (as defined in the regulations). The CBCA requires CBCA-incorporated issuers to provide certain “prescribed information”, which includes, but is not limited to, reporting on whether the board of directors or its nominating committee have considered the level of representation in management roles of “designated groups”. The designated groups are defined as: women, indigenous peoples (First Nations, Inuit and Métis), persons with disabilities and members of visible minorities. 

The Employment Equity Act Review Task Force has recommended updates to modernise the Employment Equity Act (Canada) (EEA) with respect to diversity reporting. Key changes include:

• replacing the term “designated groups” with “employment equity groups”;
• introducing terms like “racialized workers” and “Indigenous peoples”; and
• creating new designated categories for Black workers and 2SLGBTQI+ workers.

While no legislative changes have been proposed for the CBCA, the Canadian government has expressed support for these recommendations and has planned consultations to modernise the EEA. Any amendments to the EEA could influence future CBCA diversity reporting. The consultation period regarding the recommendations closed on 30 August 2024.

Securities regulators in Canada continue to focus on diversity disclosure requirements. In January 2021, the Capital Markets Modernization Taskforce, established by the Ontario government, issued its final report suggesting, among other things, that:

• Ontario securities legislation be amended to require that Canadian public companies set goals and implement timelines for diversity amongst directors and executive management, and report annually on the levels of representation at the board and executive management of those identifying as women, BIPOC, a person with a disability or LGBTQ+; and
• appropriate target levels for representation be at 50% for women and 30% for BIPOC, persons with disabilities and LGBTQ+.

Additionally, on 30 October 2024, staff of the CSA published Multilateral Staff Notice 58-317 – Review of Disclosure Regarding Women on Boards and in Executive Officer Positions, the tenth annual review by the CSA on disclosure regarding women on corporate boards and in executive officer positions. The CSA reported a small increase, as compared to its prior year’s report, in the overall percentage of women on boards and in executive officer positions. 

On 13 April 2023, the CSA proposed amendments to Form 58-101F1 – Corporate Governance Disclosure and National Policy 58-201 – Corporate Governance Guidelines pertaining to diversity, board renewal and board nominations. The CSA proposed two versions of Form 58-101F1 for comment, “Form A” and “Form B”, which are applicable to non-venture issuers.

Form A

Form A requires disclosure on an issuer’s approach to diversity in respect of the board and executive officers but would not mandate disclosure in respect of any specific groups, other than women. 

For example, an issuer would disclose its chosen diversity objectives, how progress is measured, and the mechanisms in place to achieve these objectives. 

This can be achieved by collecting data with respect to specific groups the issuer identifies as being relevant for its approach to diversity and for comparative purposes. 

There is no required format on how to present this information; the approach taken in this form is intended to provide each issuer with flexibility to design practices and policies respecting how it will address diversity in its specific circumstances, and not requiring it to report data on any specific group. 

Form B

Form B requires disclosure on the representation of five designated groups, being: 

• women;
• indigenous peoples;
• racialised persons;
• persons with disabilities;
• LGBTQ2SI+ persons; and
• persons on boards and in executive officer positions. 

An issuer may also choose to voluntarily provide disclosure in respect of other groups beyond the foregoing designated groups. 

All such data would be reported in a standardised tabular format to promote consistent and comparable disclosure. This information would be based on voluntary self-disclosure by directors and executive officers. 

In addition, this form would require disclosure regarding any written strategy, written policies and measurable objectives relating to diversity on an issuer’s board of directors. 

The key difference between the two forms is that Form B mandates disclosure on historically underrepresented groups, which is a similar approach to the board diversity disclosure requirements under the CBCA. In contrast, Form A mandates disclosure only on women’s representation and is based on a view that securities regulators should not select categories of diversity. Form A defers to an issuer to determine what additional categories or aspects of diversity they wish to implement based on the company’s business and strategy. Under the same notice, the CSA has also proposed enhanced guidelines for issuers relating to board nominations and renewals. In April 2025, the CSA announced that it was pausing its review of stakeholders’ comments from the consultation period on its new approaches towards diversity disclosure. No timeline has been provided for any restart of this initiative.

On 15 February 2025, the Department of Finance proposed rules for distributing federally regulated financial institutions (FRFIs) under the Bank Act, Trust and Loan Companies Act, and Insurance Companies Act. These proposed regulations will mandate federally regulated financial institutions, including banks, to disclose the diversity composition of their boards and senior management. The consultation period for the Diversity Information Disclosure Regulations ended on 17 March 2025. It remains to be determined when the new regulations will come into force.

Transparency – Beneficial Ownership

Recent beneficial ownership disclosure requirements are showing a trend towards increased transparency, with the goal of assisting law enforcement agencies in targeting potential money laundering and tax evasion.

Effective 1 January 2023, the Business Corporations Act (Ontario) (OBCA) was amended to require certain private corporations existing under the OBCA to prepare and maintain a register of individuals with “significant control” over the corporation. Under the OBCA, an individual with significant control is someone who: 

• is the registered or beneficial owner of, or has direct or indirect control or direction over, any number of shares that carry 25% or more of the voting rights attached to all of the corporation’s outstanding voting shares;
• is the registered or beneficial owner of, or has direct or indirect control or direction over, any number of shares that is equal to 25% or more of all of the corporation’s outstanding shares measured by fair market value;
• has any direct or indirect influence that, if exercised, would result in control in fact of the corporation; or
• is an individual to whom circumstances prescribed by regulation apply.

Certain groups, such as individuals with jointly held rights or interests in shares, who are parties to a voting or similar arrangement, and/or having certain familial relationships, are considered on a collective basis towards meeting the threshold test for significant control; where a group has met the test, all members are required to be disclosed.

For each individual with significant control, the register must include the following information per the OBCA: 

• name, date of birth and last known address;
• jurisdiction of residence for tax purposes;
• the date on which the individual became (or ceased to be) an individual with significant control;
• description of how the individual meets the definition of significant control;
• any other information that may be provided for in regulations enacted in the future; and
• a description of the steps taken to identify all individuals with significant control and to ensure that the information in the register is accurate, complete and up to date. 

The amendments to the OBCA are similar to other corporate transparency initiatives introduced by the CBCA and in the provinces of British Columbia, Saskatchewan, Manitoba, Nova Scotia, PEI, Newfoundland and Labrador and, most recently, Quebec. Effective 31 March 2023, the Act respecting the legal publicity of enterprises (LPE) requires certain companies to submit information about their “beneficial owners” to the Registraire des entreprises du Québec (REQ). The amended LPE requires the disclosure of “ultimate beneficiaries”, which is generally defined as a natural person who holds a right that allows them to benefit from a portion of the income or assets of an enterprise, or a right that allows them to direct or influence the activities of the enterprise. Registrants must provide the REQ with the following information on the ultimate beneficiaries:

• first and last name (or name if the ultimate beneficiary is a legal person) and other names used in Quebec;
• date of birth; 
• residential address;
• the type of control exercised, including the holding percentage where applicable; and
• the date on which the person became an ultimate beneficiary and, if applicable, the date on which the person ceased to be one.

As of 22 January 2024, the CBCA was amended with respect to disclosure of beneficial ownership to, among other things: 

• require the director (as defined under the CBCA) to make available to the public certain information on individuals with significant control over a corporation; 
• protect the information and identity of certain individuals;
• add, or broaden the application of, offences and provide the director with additional enforcement and compliance powers; and
• add regulatory authority to prescribe further requirements in certain provisions. It also makes consequential and related amendments to other Acts. 

Transparency – Say-on-Pay Vote

Upcoming amendments to the CBCA would require the directors of prescribed corporations to annually disclose their approach to remuneration and to provide shareholders with a non-binding “say-on-pay” vote. The CBCA amendments (under proposed Section 172.4) are passed, but not yet in force. The Ontario Capital Markets Modernization Taskforce has also suggested a number of changes including mandating an annual advisory “say-on-pay” similar to the CBCA requirements. Many public companies already voluntarily provide their shareholders with a “say-on-pay” vote. 

Glass Lewis maintains its voting policies with respect to shareholder opposition to “say-on-pay” proposals and a board’s level of engagement and responsiveness to shareholder concerns.

Where Glass Lewis finds that a company’s compensation policies and practices serve to reasonably align compensation with performance, and such practices are adequately disclosed, Glass Lewis will recommend supporting the company’s approach. If, however, those specific policies and practices fail to demonstrably link compensation with performance, Glass Lewis will generally recommend voting against the say-on-pay proposal.

Glass Lewis generally expects a board’s minimum appropriate level of responsiveness to correspond to the level of shareholder opposition (in a single year and over time) and may recommend holding compensation committee members accountable for failing to adequately respond to shareholder opposition, having regard for the level of opposition and history of the company’s compensation practices.

Furthermore, Glass Lewis will take a holistic approach when analysing executive compensation programmes and not use a pre-determined scorecard approach when considering individual features. Glass Lewis reviews unfavourable factors in a pay programme in the context of rationale, overall structure, overall disclosure quality, the programme’s ability to align pay with performance, and the trajectory of the programme as a result of changes introduced by the compensation committee.

Transparency – Incentive Awards and Clawback Policies 

A clawback policy allows an employer to reclaim compensation previously paid to employees. Clawback policies typically relate to compensation paid under incentive-based plans to certain executives and are typically administered by a company’s compensation committee or board of directors for the purpose of responding to changing financial metrics. Clawback policies may also extend to incentive-based compensation based on non-financial results of the company (ie, safety, retention and production). Many public companies have already established clawback policies.

Effective 2 October 2023, the United States Securities and Exchange Commission has adopted new amendments and rules governing clawback policies, establishing standards that needed to be adapted by companies listed on the New York Stock Exchange and Nasdaq by 1 December 2023. The CBCA, under proposed Section 172.3, could also require a company to disclose prescribed information about the recovery of incentive benefits paid to directors and employees who are members of senior management.

Innovation, Science and Economic Development Canada (ISED) provided further guidance on the prescribed information outlined in the proposed CBCA amendments. ISED explains that the prescribed information should follow a “disclose or explain” regime where companies indicate whether they have a clawback policy, and if not, the reasons why they have not adopted one. If the company does have a policy, it will be required to disclose the policy’s objectives and key provisions.

Starting from 2023, Glass Lewis has raised concerns about executive pay programmes where less than half of an executive’s long-term incentive awards are subject to performance-based vesting conditions. As with the past years, Glass Lewis may refrain from a negative recommendation in the absence of other significant issues with the programme’s design or operation, but performance-based awards that are significantly rolled back or eliminated from a company’s long-term incentive plan may be viewed negatively.

Glass Lewis continues to support clawback or “malus” provisions in 2025 to safeguard against unwarranted short-term and long-term incentive awards.

In situations where a company determines not to follow through with financial recovery from an executive officer, Glass Lewis will assess the appropriateness of such determination for each case. A thorough, detailed discussion of the company’s decision to not pursue recoupment and, if applicable, how the company has otherwise rectified the disconnect between executive pay outcomes and the shareholder experience will be considered. The absence of such enhanced disclosure may impact Glass Lewis’ assessment of the quality of disclosure and, in turn, may play a role in Glass Lewis’ overall recommendation for the advisory vote on executive compensation. The clawback provision should provide recoupment authority regardless of whether the employment of the executive officer was terminated with or without cause.

The CCGG also encourages the use of clawback policies to monitor performance-based compensation.

Transparency – Board Matters

Glass Lewis has noted the importance of companies providing substantive disclosure about the experience and expertise of board nominees. Where the disclosure of an issuer in the S&P/TSX 60 Index is not sufficient to allow for a meaningful assessment of the key skills and experience of incumbent directors and board nominees, Glass Lewis may recommend voting against the chair of the nominating committee, or its equivalent.

Glass Lewis may now issue a negative voting recommendation in respect of the chair of the governance committee of a TSX-listed issuer, or the most senior member of the committee in the absence of a chair, if the governance committee did not meet at least once during the year in review.

ISS has clarified that former CEOs of a TSX-listed issuer will be deemed non-independent unless there are exceptional circumstances to reassess this classification after a minimum cooling-off period of five years. ISS will continue to recommend against any director who has served as a former CEO and is a member of the audit or compensation committee unless ISS classifies such director as independent following the cooling-off period. This recommendation also applies to a director who has served as a CFO within the past three years.

Transparency – Voting “For” or “Against” Directors of Public Corporations

Canadian corporate statutes have historically required that shareholders either vote for or withhold their vote on the election of directors at annual meetings. This has meant that if a director receives just one vote for their election at an uncontested shareholder meeting, then that director will be elected, even if a vast majority of shares are withheld from voting for that director. 

Starting in 2014, all corporations listed on the TSX were required to adopt a majority voting policy pursuant to which each director must be elected by a majority of votes cast with respect to their election, except at a contested meeting. Majority voting policies must also require:

• a director to immediately tender their resignation if they are not elected by at least a majority (50% +1 vote) of the votes cast with respect to their election;
• the board to determine whether to accept the resignation within 90 days of the shareholder meeting, and the resignation should be accepted in the absence of exceptional circumstances;
• the resignation to become effective when accepted by the board;
• a director who tenders a resignation not to participate in board or committee meetings at which the resignation is considered; and
• the issuer to promptly issue a news release with the board’s decision including, in the case of a board not accepting the resignation, the reasoning behind such a decision.

On 31 August, 2022, amendments to the CBCA came into force that changed the majority voting requirements for board nominees, as set out below.

• CBCA-incorporated public corporations must allow shareholders to vote “for” or “against” individual director nominees in an uncontested election, rather than “for” or “withhold”.
• Where only one nominee is up for election for each board seat and less than 50% of the votes cast by shareholders are “for” a particular director nominee, such a nominee will not be elected as a director (subject to provisions in the issuer’s articles). However, if an incumbent director is not elected by a majority of “for” votes at the meeting, they will still be permitted to remain as a director until the earlier of: (i) the 90th day after the day of the election; or (ii) the day on which their successor is appointed or elected.
• The elected directors may reappoint the incumbent director even if they do not receive majority support in the most recent election in certain limited circumstances:
1. where it is required to satisfy the CBCA’s Canadian residency requirement; or
2. where it is required to satisfy the CBCA’s requirement that at least two directors of a distributing corporation are not also officers or employees of the corporation or its affiliates. 

Preparing for Mandatory Climate-Related Disclosure – Governance Changes for Public Corporations

On 18 October 2021, the CSA published a proposed National Instrument 51-107 – Disclosure of Climate-related Matters and its proposed Companion Policy 51-107CP (together, the Climate Disclosure Proposals) for comment. 

The Climate Disclosure Proposals would require disclosure based on recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). The Climate Disclosure Proposals would require issuers to make disclosure in the following areas.

• Governance – describing the board’s oversight of climate-related risks and opportunities, and management’s role in assessing and managing climate-related risks and opportunities.
• Strategy – describing any climate-related risks and opportunities identified over the short, medium and long term and describing the impact of these risks and opportunities on its business, strategy and financial planning.
• Risk management – describing its processes for identifying, assessing and managing climate-related risks and how these processes are integrated into overall risk management.
• Metrics and targets – describing its metrics used to assess climate-related risks and opportunities and targets used to manage these risks and opportunities.

The TCFD contemplates that issuers should disclose greenhouse gas emissions (Scope 1, 2 and 3). The Climate Disclosure Proposals would require issuers to make this disclosure or explain why they do not. The Climate Disclosure Proposals would not require issuers to disclose the resilience of their strategy with reference to various climate scenarios, a key element of the TCFD recommendations.

In preparing to comply with the new requirements, corporations and boards should be taking the following steps.

• Boards of directors should expressly establish oversight of climate-related risks and opportunities of the issuer. This will require reviewing, and where necessary amending, board charters and mandates and board skills and competencies matrices, and then reviewing whether any changes need to be made in board composition to ensure the board has the necessary climate competencies to effectively provide this oversight.
• Boards of directors should expressly task management with responsibility for assessing and managing climate-related risks and opportunities. This will involve the review and revision of role descriptions and mandates. As climate-related disclosure is added to an issuer’s management information circular, annual information form (AIF) or management’s discussion and analysis (MD&A), the annual and interim CEO/CFO certifications (National Instrument 52-109 Certification of Disclosure in an Issuer’s Annual and Interim Filings) will apply to that climate-related disclosure. Management will need to have designed disclosure controls and procedures to provide reasonable assurance that climate-related material information will be made known to the CEO and CFO, and that required disclosure on climate-related matters is made. Boards of directors will need to be comfortable that these controls and procedures are in place and have oversight over their effectiveness.
• Boards of directors should consider board committee roles in the review and assessment of climate-related risks. Boards of directors should consider the mandates of any board committees that have delegated responsibilities around risk review and assessments, and carefully consider where the assessment of climate risks should fit within those board committees, if at all.
• Boards of directors should specifically consider the role of the audit committee in the review and assessment of climate-related risks and opportunities. The assessment of climate-related risks and opportunities is likely to be done within existing enterprise risk management systems, often overseen by the audit committee. At a minimum, the audit committee will need to ensure that once climate-related risks and opportunities are assessed, their implications are properly reflected in the issuer’s financial reporting including in assumptions, uncertainties and estimates made in the preparation of financial statements.
• Boards of directors should be aware that the Climate Disclosure Proposals require climate-related disclosure to be contained in documents that by law must specifically be reviewed and approved by the board (namely, the corporation’s AIF, management proxy circular and, in some cases, the MD&A). Climate-related disclosure is often made in standalone sustainability or other reports.
• Boards of directors will need to assess the materiality of climate-related risks and opportunities. The Climate Disclosure Proposals require an issuer to disclose:
1. climate-related risks and opportunities (short, medium and long-term) and their impact on the issuer’s businesses, strategy and financial planning (Strategy);
2. the issuer’s processes for identifying, assessing and managing climate-related risks (Risk Management); and
3. metrics and targets used by an issuer to assess and manage climate-related risks and opportunities (Metrics and Targets) only where the information is “material” – ie, where a reasonable investor’s decision to buy, sell or hold securities is likely to be influenced if the information is omitted or misstated. 
• Boards of directors should consider the need for scenario analysis as contemplated within the TCFD recommendations. They should consider whether in order to properly identify climate-related risks and opportunities, and their impact on an issuer’s business, management needs to undertake some scenario analysis as contemplated within the TCFD recommendations notwithstanding that the Climate Disclosure Proposals do not require disclosure in respect of those scenarios. In turn, boards would need to review that analysis. The use of scenario analysis as a tool to assess risks and opportunities is generally understood to offer benefits in situations where the precise timing and magnitude of risks are uncertain, the analysis needs to be forward-looking, and risks (and opportunities) can be high impact where historical experience is not necessarily a guide to the likelihood of their future occurrence.
• Boards of directors will need to consider the annual timing of preparation of an issuer’s climate-related disclosure. Currently, many issuers are reporting this type of information in standalone sustainability reports and/or other documents released throughout the year on different schedules from the typical annual disclosure cycle.
• Boards of directors should consider any de facto requirement to disclose GHG emissions. They should consider whether there will develop (or maybe already has developed in some cases) a de facto requirement to disclose GHG emissions in their disclosure documents, notwithstanding that the Climate Disclosure Proposals adopt a “comply or explain” model allowing issuers to omit that disclosure if they explain why. Access to the various sustainable finance tools or funding from some institutional investors may already require that an issuer discloses its GHG emissions. If issuers enter into sustainability-linked financings based on GHG emissions, they will be reporting their GHG emissions to banks and bond holders. Canada’s largest banks (and other Canadian and international financial institutions) have established net zero emissions targets. To satisfy these requirements, it seems likely issuers will face more general requirements to provide this GHG emissions disclosure to their banks. Many issuers are already providing GHG emissions information in investor presentations or in separate sustainability reports. Where investors and other stakeholders are asking for this data, it becomes harder to argue the information is not “material”.
• Boards of directors should consider whether the issuer should start early in addressing the disclosure contemplated by the Climate Disclosure Proposals.
• Boards of directors will need to monitor the development of climate disclosure ratings and rankings established by third parties. As has occurred in respect of general governance disclosure (see, for example, the CCGG and The Globe and Mail Board Games), benchmarking of issuers’ climate-related disclosure has started. See, for example, the Climate Action 100+ corporate benchmarking which looks at corporate disclosures around climate-related governance, reduction of GHG emissions and public disclosure following the TCFD recommendation. These rankings (and their score cards) are likely to become a consideration in the preparation of issuers’ public disclosure documents. 

Since the CSA’s Proposed Climate Disclosure Proposals, the International Sustainability Standards Board (ISSB) has issued a climate-related disclosure standard as well as a general standard for sustainability-related financial information (ISSB Standards). The Canadian Sustainability Standards Board (CSSB) has also issued its climate-related disclosure standard and general sustainability standard (CSSB Standards), which are substantively the same as the ISSB Standards except for few transitional matters relating to Scope 3 emissions, quantitative scenario analysis and the general timing of disclosure. The ISSB Standards and the CSSB Standards are voluntary standards.

Following the release of the CSSB Standards, the CSA announced that it would continue to work toward a revised climate-related disclosure rule and would consider the CSSB Standards with modifications appropriate for the Canadian capital markets. In April 2025, the CSA announced it was pausing its work toward a revised climate-related disclosure rule, but encouraged companies to use the CSSB Standards if they were making voluntary sustainability disclosure. No timeline has been provided to restart this work.

ISS and Glass Lewis have climate accountability voting policies that address climate-related disclosure and board oversight of climate-related issues. Effective for shareholder meetings held after 1 February 2025, and under its “Climate Accountability Policy”, the ISS will generally vote against or withhold from the incumbent chair of the appropriate committee (or other directors) of companies that are significant GHG emitters (ie, companies identified by the Climate Action 100+) and do not: (i) make adequate climate-related risks disclosure in line with the four-pillar framework established by the TCFD; or (ii) adopt appropriate GHG emissions targets. 

Glass Lewis will assess whether climate-related disclosures are aligned with the recommendations of the TCFD at TSX 60 companies with material exposure to climate risk. It will also assess whether these companies have disclosed explicit and clearly defined board-level oversight responsibilities for climate-related issues. If these are absent or significantly lacking, Glass Lewis may recommend voting against the chair of the committee (or board) charged with oversight of climate-related issues, or if no committee has been charged with such oversight, the chair of the governance committee.

Similar to ISS, and effective for shareholder meetings held after 1 January 2023, Glass Lewis has adopted a “Board Accountability for Climate-related Issues” policy under which it will make negative voting recommendations for the chair of the relevant committee (or board) of high-emitting companies (ie, whose GHG emissions represent a financially material risk, including companies identified by the Climate Action 100+) that do not: (i) provide thorough TCFD-aligned disclosure; or (ii) clearly define board oversight responsibilities for climate-related issues. The Glass Lewis policy may be extended to the chair of the governance committee where no committee (or board) has been assigned oversight of climate-related issues and could also apply to other directors. The group of companies to which the Glass Lewis policy applies appears to be broader than for the ISS policy. Glass Lewis believes that boards of high-emitting companies should have explicit and clearly defined oversight responsibilities for climate-related issues, which builds on broader Glass Lewis and ISS policies requiring board-level oversight of environmental issues and disclosure of such oversight. 

The Ontario Teachers’ Pension Plan, one of Canada’s largest investors, continues to advocate for strong climate oversight in its 2025 Proxy Voting Guidelines. The 2025 Guidelines maintain heightened expectations of Audit Committees, including climate literacy as a core competency for its members. Climate-related impacts must be evaluated when reviewing budgets, performance and M&A activity. Additionally, the Audit Committee should understand environmental and related reporting requirements for companies.

In May 2024, Senator Julie Miville-Dechêne introduced the 21st Century Business Act (Bill S-285). Bill S-285 is a Senate public bill that proposed to amend the CBCA to incorporate social and environmental obligations into corporate duties and decision-making. In particular, Bill S-285 sought to:

• mandate directors and officers of CBCA companies to consider prescribed stakeholder constituencies, including the environment, when determining the best interests of the corporation; and
• require annual reporting of a corporation’s social and environmental impact.

On 6 January 2025, Bill S-285 was terminated due to the prorogation of the Parliament of Canada. It remains to be determined whether the public bill will be re-introduced in the new session.

Shareholder Meetings and Materials

The debate concerning the format of shareholder meetings continues. Past legislative amendments have introduced flexibility for companies with respect to shareholder meetings, such as the following. 

On 31 May 2022, amendments to the Business Corporations Act (Alberta) (ABCA) came into force adjusting the notice period of shareholder meetings for Alberta private corporations to a minimum of seven days and a maximum of 60 days (formerly, minimum of 21 days and maximum of 50 days). The amendments under the ABCA also permit corporations to send documents required to be sent to directors and shareholders by electronic means.

On 1 October 2023, changes to the OBCA relating to shareholder meetings came into force. These changes expressly allow virtual shareholder meetings (under Section 94(2)) and also allow companies to determine the manner by which shareholder meetings are held (under Section 94(3)(a)).

On 22 February 2024, the CSA provided updated guidance on virtual shareholder meetings after providing initial guidance in February 2022. The guidance focuses on disclosure concerning shareholder access and participation at virtual meetings, and shareholder participation at virtual meetings.

In terms of disclosure, the CSA suggests that reporting issuers provide:

• clear and comprehensive disclosure in management information circulars and associated proxy-related materials concerning the logistics for accessing, participating and voting at a virtual shareholder meeting;
• full explanations of the registration, authentication and voting process for shareholders;
• shareholders with information concerning the procedures for how shareholder questions will be received and addressed, and how shareholder participation will otherwise be accommodated and managed at the meeting; and
• contact information where shareholders can obtain assistance in the event of difficulties during the registration process or while accessing and attending the meeting.

In terms of shareholder participation, the CSA suggests reporting issuers to provide for a level of shareholder participation at a virtual meeting that is comparable to that which a shareholder could reasonably expect if they were attending an in-person meeting. This would include opportunities to make motions or raise points of order, and the ability to raise questions and provide direct feedback to management in any question and answer segment of the meeting. Proponents of shareholder proposals accepted to be voted on at the meeting should typically also be given the opportunity to speak to the proposal.

Glass Lewis has clarified its expectations that companies should engage with their shareholders when determining the format for their annual shareholder meetings. When in-person attendance is not permitted, companies must provide a rationale for this choice. While Glass Lewis does not have a policy based solely on shareholder meeting format, it may recommend voting against the chair of the governance committee, or another relevant director, where the board has failed to sufficiently respond to legitimate shareholder concerns regarding the meeting format.

Similar to Glass Lewis, ISS raises concerns about virtual-only shareholder meetings. ISS recommends voting against proposals to amend or adopt the company’s articles or by-laws to include a provision that gives the directors discretion to hold virtual-only shareholder meetings without compelling rationale.

The CCGG has also expressed concerns about virtual-only shareholder meetings and advocates for hybrid or in-person meetings.

Written Resolutions of Shareholders

Corporate statutes in Canada have long contemplated that shareholders can sign written resolutions in lieu of holding a shareholder meeting. Typically, these resolutions need to be signed by all shareholders to be valid, and so have been a helpful tool for closely held corporations. On 28 March 2023, amendments to the ABCA came into force allowing for written resolutions signed by holders of at least two thirds of the shares entitled to vote at the shareholder meeting to be valid as if passed at a meeting. The reduced threshold is eligible only for private Alberta Corporations, and brings the ABCA into alignment with other corporate statutes in Canada (such as in Ontario and British Columbia) that permit non-unanimous written resolutions.

Canadian Director Residency Requirements

Canadian corporate statutes have required that a certain percentage (typically 25%) of the directors of a corporation be Canadian residents. “Canadian resident” has been defined to include Canadian citizens and permanent residents, in each case, who are ordinarily resident in Canada. 

In March 2023, the Business Corporations Act, 2021 (Saskatchewan) was amended to remove the Canadian resident director requirement. In its place, corporations without a director or officer who is a Saskatchewan resident must designate an attorney in Saskatchewan. The Saskatchewan amendment is in line with the majority of Canadian provinces and territories including British Columbia, Alberta, Ontario, Quebec, Nova Scotia and New Brunswick. 

Interlocking Directorships

Glass Lewis believes that a board should be wholly free of people having identifiable conflicts of interest. It generally recommends that shareholders withhold votes from affiliated or inside directors where the director has an interlocking relationship with one of the company’s executives. Top executives serving on each other’s boards creates an interlock that poses conflicts that should be avoided to ensure the promotion of shareholder interests above all else.

Glass Lewis also considers interlocking relationships with close family members of executives or within group companies, and may also determine that conflicts of interest exist. Further, it also reviews multiple board interlocks among non-insiders (ie, multiple directors serving on the same boards at other companies) for evidence of a pattern of poor oversight.

Glass Lewis has expanded its policy on interlocking directorships to consider both public and private companies.

Board Oversight of AI

As generative AI continues to grow with an unprecedented speed of adoption, it is accompanied with demand from stakeholders for board oversight and guardrails. Regulators across the globe are exploring legislation that would curtail the use of certain types of AI. In 2023 in the US, for the first time there were shareholder proposals calling for disclosure on the board’s oversight of AI and ethical guidelines on the use of AI.

Davies Governance Insights 2024 suggests that boards and management can take a number of actions to address such concerns, including: (i) understanding the use cases of current AI technology for the business; (ii) understanding the risks inherent in the use of AI technology; and (iii) developing an AI governance policy to help address current risks and to provide a framework to address what is yet to come.

On 5 December 2024, the CSA published “Staff Notice and Consultation 11-348 – Applicability of Canadian Securities Laws and the Use of Artificial Intelligence Systems in Capital Markets” to clarify how existing securities laws apply to the use of AI systems by participants in capital markets. The CSA identified “AI washing” as a disclosure deficiency and a form of overly promotional disclosure which can be misleading to the public or constitute a misrepresentation.

Effective for shareholder meetings held after 1 January 2025, Glass Lewis has established a new policy addressing board oversight of AI. Glass Lewis believes issuers that use or develop AI technologies should adopt strong internal frameworks that include ethical considerations, ensure effective oversight of AI, and expect clear disclosure on how boards are overseeing AI. To ensure effective oversight, Glass Lewis recommends that boards engage in continued board education to expand their collective expertise and understanding in this area and/or appoint directors with AI expertise.

Glass Lewis believes that clear disclosure on how boards are overseeing AI and expanding their expertise is likely to be of value to shareholders. While Glass Lewis will not make voting recommendations solely based on a company’s AI oversight practices and disclosure, it may recommend against the re-election of accountable directors if there is evidence that insufficient management of AI technology has resulted in “material harm” to shareholders.