Join the "Corporate
Responsibility Coalition" to help make Canada's
Back to Corporate
Corporate dishonesty, secrecy and irresponsibility abuses,
kills and wastes people and the environment.
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
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
Join the Corporate Responsibility
on to the 15 Recommendations to Make Canada's
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
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:
The federal government is considering making further changes
to the CBCA and related laws and regulations. In
addition, the Ontario government is considering changes to
investment industry laws and regulations which will affect
most publicly traded corporations in Canada.
- creates a new Criminal Code offence of improper
- 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.
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
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.
We look forward to hearing from you, and hope
your group will join the
Corporate Responsibility Coalition.
If you have any questions, please don't
hesitate to contact Democracy Watch at Tel: (613)
We can also be reached by fax at (613) 241-4758, and
by email at firstname.lastname@example.org
15 Recommendations to Make Canada's
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
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
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.
Companies often do not hesitate to reject shareholder
proposals, and often for very technical or unjustifiable
reasons. The shareholder is then forced to go to court
for a review of the decision, with the corporation
bringing its vast resources to bear on each case.
As a result, shareholders are denied many opportunities
to hear other shareholders' proposals, and corporations
easily and unjustifiably escape accountability to their
own shareholders in many cases. Talisman Energy is one
recent example of a company that used technical and
questionable reasons for rejecting shareholder proposals
filed in 1998 by 11 churches and religious orders from
Canada and the U.S.
In contrast, in the United States, corporate and
securities laws are much more open to shareholder
proposals generally, and specifically relating to
corporate responsibility issues.
Canadian governments should follow the U.S. lead and
lower barriers to shareholders, the true owners of
corporations, having a say in corporate decision-making.
Enacting recommendations #1-7 would be a significant,
and necessary, step forward in lowering barriers to
shareholders putting forward proposals for consideration
by other shareholders.
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.
Corporate directors and managers are currently required,
for example under subsection 122(1) of the Canada
Business Corporations Act (CBCA), to act
only in the interests of the corporation (ie. to
increase financial return for shareholders). We view
this as a fundamental cause of irresponsible activities
As in the area of shareholder proposals, Canada is
behind other countries in terms of requiring corporate
boards and managers to consider also other stakeholders'
interests in making decisions. Both the Canadian
Institute of Chartered Accountants and the 1994 Toronto
Stock Exchange report Where Were the Directors?
have noted the legitimacy of directors recognizing
stakeholder interests, but there is no legal requirement
to do so.
In England directors of a company incorporated under the
Companies Act must take into account the
interests of not only shareholders, but also employees,
in their business decisions. Similarly, a majority of
U.S. states have introduced so-called "non-shareholder
constituency" laws. These laws explicitly allow
directors to consider the interests of employees,
customers, suppliers and others in making their business
decisions, and in Connecticut directors are required to
consider stakeholder interests.
Canada should follow the lead of these jurisdictions and
require corporate directors to consider non-shareholder
stakeholders when making decisions, and account publicly
for the extent to which they do.
We suggest that the following words be added to the
relevant sections of all laws under which corporations
are established in Canada (e.g. the CBCA and provincial
and territorial incorporation laws, as well as specific
corporate sector laws such as the Bank Act, the
Insurance Companies Act, the Telecommunications
Act, the Broadcasting Act etc.).
Here are the proposed words to add to these laws:
"Corporations established under this law shall advance
the interests of shareholders only in ways that fully
take into account, fully and publicly document, and
fully adhere to the highest global standards for the
protection of human rights, the environment, public
health and safety, consumer rights and shareholder
Disclosure of Information about Corporate
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
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.
RECOMMENDATIONS #9 and 10:
As in the area of shareholder proposals and fidiciary
duty, Canada is behind other countries in terms of
requiring corporations to disclose information about
their activities, and protecting "whistle-blowers".
For example, in the U.S. publicly traded companies are
required through a Securities Exchange Commission system
to disclose violations of environmental and labour laws.
Also while whistleblowers are protected from retaliation
under some environmental, human rights and health &
safety laws in Canada, employees are protected under a
much wider range of laws in the U.S.
A much better way for Canada to ensure protection of
corporate employees who uphold the law in all situations
is to enact protection in the CBCA and other federal and
provincial incorporation laws.
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
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.
While lowering the barriers to shareholder proposals,
expanding the criteria for corporate decision-makers,
and increasing disclosure requirements and whistleblower
protection will help ensure that corporations act
responsibly, other measures are needed.
First, public monies should not be subsidizing
corporations that violate laws and as a result, as the
U.S. federal government has proposed, violators should
be prohibited from receiving government grants and
Second, the structure of corporations allows the
corporation often to escape criminal liability for the
acts of its employees. As the Department of Justice
proposed in 1995, the Criminal Code of Canada
should be amended to expand the liability standard for
Third, stakeholders should have a direct avenue to
challenge corporations that ignore their interests in
making decisions and undertaking activities. Expanding
the oppression remedy to include stakeholders would
create this avenue, and would be consistent with our
proposed expansion of the concerns and interests that
must be addressed by corporate decision-makers.
Finally, Canada is behind other countries in terms of
penalties for corporate wrongdoings. Several Canadian
jurisdictions have removed from their corporate laws in
the past few decades the right of governments or courts
to dissolve corporations that repeatedly violate laws.
The removal of this penalty was misguided as it further
protected corporations from accountability for
wrongdoings which, in some cases, justify dissolution as
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.
While lowering the barriers to shareholder proposals
will help shareholders have a greater voice in the
corporations they own, individual shareholders in
particular will continue to face high financial and
technical barriers to making their voices heard. The
method of organizing an individual shareholders
association, independent of all corporations, described
in Recommendation #15 has worked well for organizing
utility ratepayer groups in some U.S. states, and should
be implemented in Canada.
For more information about how this method of organizing
citizen watchdogs groups to watch over corporations
works, please view Democracy Watch's Citizen Association
September 23, 2011