Entry into the boardroom and C- suite continues to be elusive for many Canadian women. Despite outnumbering men in college and university enrollment, notwithstanding their greater numbers in the workforce, women continue to occupy disproportionately fewer positions in senior management and the boardrooms of Canadian enterprise, particularly public companies. From think-tanks to industry associations to governments, strategies to bolster female participation in senior management and board positions have been considered with increasing frequency and vigour.
The latest, this time from the government sector, has come with the introduction of Bill C-25. The draft legislation, recently tabled by the federal government, proposes to amend, among other statutes, the Canada Business Corporations Act (CBCA). The CBCA regulates federally- incorporated companies and is the home jurisdiction to many of the largest TSX- listed entities.
Notionally, Bill C-25, which will apply only to reporting issuers, sets out a "comply or explain" regime. Annual disclosure to a company's shareholders with respect to the level of diversity of that company's senior management and directors will now be required. In doing so, the federal government proposes to bring its corporate legislation in line with some provincial securities legislation. The approach set out in Bill C-25 favours persuasion versus the harder approach used by some European regulations, namely, imposition of fixed quotas. What the Bill does not provide is detail with respect to the precise information that must be disclosed. Regulations promulgated after the passage of the Bill will list these various requirements. Because of this lack of available detail, it is difficult at this point to say whether the federal effort will be sufficiently tough to compel progress on the diversity front.
In addition, Bill C-25 does not actually define "diversity." Background materials released with the text of Bill C-25 suggest diversity at a minimum refers to gender diversity. But it is widely expected that as the Bill matures and evolves through Parliament, the significance of the definition may become more broad.
Clearly, the policy behind the amendment is to require disclosure of diverse representation and corporate policies in support of diversity. Should these policies not exist or should representation be inadequate, presumably the increased statutory attention will cause shareholders to similarly pay greater attention – and hopefully prompt shareholders to elect more diverse boards and to employ more diverse senior management.
What comes next? We can look forward to second reading of Bill C-25 in the new year and no doubt a lively debate which will examine whether the Bill goes far enough by Canadian standards to promote corporate diversity.