Elaine McCoy - Your Alberta Senator

Corporate Governance

Navigating through “The Perfect Storm”: Safeguards to Restore Investor Confidence

Date:                2003
Chair:               Hon. E. Leo Kolber (QC)
Deputy Chair:   Hon. David Tkachuk (SK)
Downloads:      Click here

Summary:
In the wake of the Enron scandal and suspected corporate scandals in other US companies, the Committee reviewed the circumstances in which they arose, explored whether similar events might occur in Canada and, if so, how they might be avoided. Three factors were examined: failed corporate governance; lax auditing and accounting standards and oversight; and incentives provided by executive compensation systems.

Key recommendations include splitting the positions of Chair and CEO for large corporations, and excluding audit companies from non-audit contracts.

Impact:
The Conference Board of Canada uploaded the Senate’s report as a resource for its members. In addition, Policy Options published an article featuring the report in November 2003. The Federal Accountability Act (Bill C-2) introduced split Chair and CEO positions for Crown corporations in 2007.

The Governance Practices of Institutional Investors

Date:               1998
Chair:Hon.       Michael Kirby (NS)
Deputy Chair:  Hon. David Tkachuk (SK)
Downloads:     Click here

Summary:
Institutional investors are financial institutions that invest savings of individuals and non-financial companies in the financial markets. Examples of institutional investors in Canada include

banks, caisses populaires and other deposit-taking institutions mutual funds life insurance companies public sector pension plans private sector pension plans.

Institutional investors have the capacity to influence corporations in which they invest and witnesses told the Committee of numerous shortcomings in the way some institutional investors are operated and governed. The Committee made 11 recommendations falling into two broad categories:

internal governance activities of institutional investors in Canada, and activities of institutional investors in the governance of publicly traded corporations in which they invest.

Impact:
The Senate’s report was referenced in Corporate Governance and Accountability in Canada (May 2002), and uploaded on the Association of Universities and Colleges of Canada’s website as a resource for its members.

Corporate Governance

Date:               1996
Chair:Hon.       Michael Kirby (NS)
Deputy Chair:  Hon. David Angus (QC)
Downloads:     Click here

Summary:
The report discusses a number of issues, including

liability of corporate directors, corporate auditors and others associated with a corporation; shareholder communications, both between a corporation and its shareholders and also among shareholders; citizenship and residency requirements imposed on boards of directors and on board committees; financial assistance granted by the corporation to directors, officers, shareholders and others; insider trading rules; and rules governing takeover bids.

Impact:
The Senate’s report led to a second phase of amendments to the Canada Business Corporations Act. Areas such as directors’ liability, insider trading and accounting practices were updated and enacted by Parliament in November 2001.

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