The head people at large corporations knew that tobacco, asbestos, food fats and additives, pesticides and pollution were harmful for years but kept it secret to make more money for themselves and their businesses.

Corporations set up under the Canada Business Corporations Act (CBCA) are major players both in Canada and in terms of Canadian corporate operations internationally. Not surprisingly, the environmental, social and ethical track record of these businesses is often of enormous concern to various corporate "stakeholders", including local communities, customers, employees, shareholders, governments and even the nation as a whole.

Over 155,000 of Canada's large corporations are set up under Canada's federal corporations law, the Canada Business Corporations Act (CBCA), including half of the largest 500 corporations in the country.

The CBCA sets out the basic rights and responsibilities for these corporations, and is essentially Canada's "corporate citizenship" law.

In recent years, stakeholders from many different sectors pressing for greater corporate social responsibility on the part of CBCA corporations have encountered a number of legal roadblocks. Several of these difficulties derive from the CBCA itself. Most notable among CBCA-related problems are barriers to shareholder activism. 

Also of concern are legal limits that stop corporate executives from taking into account stakeholder interests when making corporate decisions.  In addition, a number of other shortcomings in Canadian laws relating to corporate accountability and responsibility have been identified by non-governmental groups and governments over the years.  These issues are discussed more fully below.

Canada's biggest corporations spend $25 billion annually on their lobbying -- so citizen groups must band together into a large coalition if there is any hope to counter the corporate lobby and win key corporate responsibility changes.

The Corporate Responsibility Coalition has been formed as part of Democracy Watch's Corporate Responsibility Campaign to broaden support for changes to Canada's corporate laws to ensure that corporations act responsibly or can be held accountable if they act irresponsibly.

Becoming a member group of the coalition is very easy. Just sign on to the 15 Recommendations to Make Canada's Corporations Responsible, set out below and send us a note stating that your group wants to join the coalition and help with our campaign.  And please also send a letter to key politicians using the Corporate Responsibility Action Alert.

Thirty-one citizen groups, including 18 national groups and 13 groups from five provinces, have signed on to the 15 recommendations to date, as follows:
Alliance for Public Accountability, Association de protection des épargnants et investisseurs du Québec (APEIQ), Canadian Council for International Cooperation, Canadian Friends of Burma, Canadian Labour Congress (CLC), Canadian Lawyers Association for International Human Rights, Canadian Union of Public Employees (CUPE), Citizens Council on Corporate Issues, Citizens for Public Justice, Democracy Education Network, Democracy Watch, End Legislated Poverty, Ethical Investors Group (Montreal), Greenpeace Canada, Island Residents Against Toxic Environments (IRATE), Low Income Families Together (LIFT), Maquila Solidarity Network, MiningWatch Canada, National Action Committee on the Status of Women, National Union of Public and General Employees, Ontario Public Interest Research Group-Carleton, Ontario Public Interest Research Group-Guelph, Ontario Public Interest Research Group-Ottawa, Oxfam-Canada, Partnership Africa Canada, Saskatchewan Action Committee on the Status of Women, Science for Peace, Sierra Club of Canada, Sierra Youth Coalition, Social Change Associates, Vancouver Island Public Interest Research Group.

On February 6, 2001, the government introduced Bill S-11.  The government made a progressive change lowering the barriers to shareholder proposals (thereby implementing proposal #1 of the Corporate Responsibility Coalition, set out below) but did not include any other corporate responsibility measures in the new bill.  Bill S-11 was passed by Parliament in June 2001.

In March 2004, the Corporate Responsibility Coalition won more of its proposed changes (specifically, changes addressing proposals #10 and #12 set out below) when the federal government passed Bill C-45 which changed the Criminal Code to make it easier to hold corporations accountable for crimes, and when the federal government passed Bill C-13, which:

• creates a new Criminal Code offence of improper insider trading;
• provides whistleblower protection to employees who report unlawful conduct; and
• increases the maximum sentences for existing fraud offences and establishes a list of aggravating factors to aid the courts in sentencing.

While the changes to the CBCA (and provincial corporation laws and related measures) recommended by the Corporate Responsibility Coalition may appear difficult to attain, the victories Democracy Watch has won by organizing the Canadian Community Reinvestment Coalition -- including our success in defeating the bank mergers in 1998 -- have taught us that broad-based coalitions can overcome even the strongest corporate lobby groups.

I. Shareholder Proposals
1. Provincial governments should follow the lead of the federal government which passed Bill S-11 in June 2001 and prohibited federally incorporated corporations from refusing to circulate for a shareholder vote proposals made by shareholders that propose that cause-related, responsible actions be taken by the corporation.  As under the federal law, provincial governments should allow all shareholder proposals as long as the proposal relates to the corporation's activities.

2. The federal and provincial governments should change corporation laws so that shareholders do not have to own more than a few shares for a short period of time before they can make a proposal to other shareholders.

3. The federal and provincial governments should change corporation laws (such as section 137 of the Canada Business Corporations Act (CBCA)) to specify that the maximum length of the shareholder proposal [proposal plus supporting statement] be 500 words, and that the corporation's response also be limited to a maximum of 500 words.

4. The federal and provincial governments should change corporation laws (such as clause137(5)(d) of the CBCA) to allow re-submission of substantially similar shareholder proposals within two years if the following minimum levels are met: 3% approval for the first time the proposal is put to vote; 6% for the second time it is put to vote; and 10% for any subsequent time. The minimum levels should be calculated as a percentage of the shareholder vote exclusive of the vote of a controlling shareholder.

5. The federal and provincial governments should change corporation laws (such as section 137 of the CBCA) to require that a corporation give notice in the present year's proxy circular of the deadline for submission of proposals for the following year.

6. The federal and provincial governments should change corporation laws (such as section 137 of the CBCA) to require that a corporation justify, to a specified review agency, why a shareholder proposal is excluded. The review agency should use a low-cost, quick procedure for reviewing disputes. In addition, a corporation seeking to reject a proposal must bear the costs of the action and discharge the burden of proof in any administrative or judicial process.

7. The federal and provincial governments should change corporation laws to make them similar to subsection 116(5) of the Ontario Business Corporations Act (OBCA) which requires that a proposal to make a by-law that is adopted by shareholders at a meeting is effective from the date of its adoption.

II. Fiduciary Duty
8. To guarantee that directors do not run afoul of fiduciary duties in responding to socially responsible shareholder proposals, and to help ensure corporations act responsibly, the federal and provincial governments should change corporation laws to require directors to consider non-shareholder stakeholder interests in making decisions, and to account publicly for the extent to which they do.

III. Disclosure of Information about Corporate Activities
9. In order to facilitate tracking of corporate activities in all areas of concern to stakeholders, the federal and provincial governments should change corporation laws to require corporations to disclose detailed information about their records of compliance with labour, environmental, human rights, consumer, health & safety, criminal, competition and tax laws or policies, and the government should set up easily accessible databases on the Internet and elsewhere containing this information.

10. The federal and provincial governments should change corporation laws so that anyone, especially staff or management, who discloses information a corporation is required to disclose, but has failed to do so, or who reports violations of legal requirements by a corporation should be protected from retaliation by the corporation.

IV. General Corporate Responsibility Measures
11. The federal and provincial governments should pass a law so that corporations and other suppliers of goods and services to governments who repeatedly violate labour, environmental, human rights, consumer, health & safety, criminal, competition and tax laws and policies are prohibited for a specific period of time (e.g. 5-10 years) from receiving grants, contracts, subsidies or tax breaks from government.

12. Corporations and their directors, officers and executives should be liable for the criminal conduct of their employees if they fail to exercise control properly over managers and employees, and as a result the manager or employee commits an offence. Further, corporations and their directors, officers and executives should be liable if they know that a manager or an employee is about to commit or is committing an offence during the course of employment, or consciously disregard information that clearly indicates that such an offence is about to be committed, or is being committed, by a manager or an employee in the course of employment.

13. The federal and provincial governments should change corporation laws to extend the oppression remedy (such as section 244 of the CBCA) to stakeholders other than security holders, creditors, directors or officers, to allow stakeholders whose interests are ignored in a corporation's decisions or cations to take the corporation to court.

14. The federal and provincial governments should change corporation laws so that the justifiable reasons for dissolution of a corporation (such as the reasons set out in section 213 of the CBCA) are expanded to include repeated violation of laws.

V. Creating an Individual Shareholders Association and Citizen Watchdog Groups for Corporate Sectors
15. The CBCA or other laws that regulate corporations should be amended to oblige corporations, in their shareholder mailouts, to include a pamphlet inviting individual shareholders to join an association of individual shareholders by paying a nominal annual membership fee.  The association would be directed by a board elected by members of the association, and would provide centralized expertise and assistance on shareholder rights issues. Requiring corporations to distribute such a pamphlet would be a very low-cost, effective way of helping individual shareholders band together across Canada.  Such collective action by shareholders remains a difficult challenge for many individual shareholders attempting to defend their rights, and for shareholders with social responsibility concerns who are trying to have their proposals considered by other shareholders.  The same method should be used to create consumer watchdog groups for all industry sectors.