Regulation 58-101 respecting disclosure of corporate governance practices 

On December 31, 2014 the final version of Regulation 58-101 respecting disclosure of corporate governance practices (the “Regulation”) including Schedule 58-101A came into force in the following jurisdictions: Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Quebec and Saskatchewan (the “Participating Jurisdictions”). 

Thus, the continuous disclosure documents of reporting issuers in those jurisdictions must provide information annually on the following:

  • the term limits and other mechanisms of renewal of the board of directors;
  • written policies on the representation of women on the board of directors;
  • how the board or nominating committee considers the representation of women on the board in identifying and nominating candidates for selection and election to the board;
  • whether the issuer considers the level of representation of women in executive officer positions when making executive officer appointments;
  • targets regarding the representation of women on the issuer’s board and in executive officer positions;
  • with respect to the issuer and its major subsidiaries, the number and percentage of directors and executive officers who are women. 

This corporate governance regulation is applicable to proxy circulars and annual information forms filed at the end of the financial year of the issuer ending on or after December 31, 2014. 

Non-venture reporting issuers in the Participating Jurisdictions will henceforth have to “comply or explain”. No quotas have been imposed or formulated in the Regulation. It will thus be interesting to learn from subsequent continuous disclosure documents whether there has been any change in the representation of women on the board of directors and in executive officer positions of the issuers concerned. 

Representations and warranties insurance 

Over the years we have seen an emerging tendency for provisions in mergers and acquisitions files for representations and warranties insurance. This aspect of M&A files is becoming increasingly prominent, as it facilitates the resolution of sometimes thorny negotiation issues inherent in these transactions. In a purchase agreement, the representations and warranties certify essential key aspects regarding the target corporation and its operations and assets. This type of insurance offers coverage of certain risks of financial loss that may flow from a breach of those representations and warranties. Depending on the circumstances of the transaction, such insurance may not always be relevant. It is, however, a tool that is becoming more and more popular in M&A transactions and will no doubt be attracting a lot more attention from commentators in the future.

Canada Business Corporations Act 

Finally, we should keep an eye out this year for the results of the public consultations conducted by Industry Canada in respect of the CBCA.