LEGISLATIVE ASSEMBLY OF
THE STANDING COMMITTEE ON JUSTICE
Wednesday,
March 1, 2006
LOCATION –
CHAIRPERSON – Ms. Marilyn
Brick (
VICE-CHAIRPERSON – Mr. Harry Schellenberg (Rossmere)
ATTENDANCE - 11 QUORUM - 6
Members of the Committee present:
Hon. Mr. Selinger
Ms. Brick, Messrs. Dewar, Dyck, Faurschou, Goertzen, Ms. Korzeniowski, Messrs. Maloway, Santos, Schellenberg, Mrs. Taillieu
APPEARING:
Mr. Kevin Lamoureux, MLA
for
WITNESSES:
Mr. Bruce King, Private Citizen
Mr. Dave Angus, President
and Chief Executive Officer,
WRITTEN SUBMISSIONS:
Mr.
Daniel J. Sherbo, Partner, Tapper Cuddy LLP
MATTERS UNDER CONSIDERATION:
Bill 16–The
Corporations Amendment Act
* * *
Madam Chairperson: Good evening. Will the Standing Committee on Justice please come to order.
This evening, this committee will be
considering the following bill: Bill
16, The Corporations Amendment Act. We do have presenters registered to speak
to this bill. It is the custom to hear public presentations before
consideration of bills. Is it the will of the committee to hear public
presentations on this bill? [Agreed]
I
will read out the names of presenters registered to speak to Bill 16: Bruce
King, private citizen, and Dave Angus, Winnipeg Chamber of Commerce.
Those
are the persons and organizations that have registered so far. If there is
anyone else in the audience who would like to register or has not yet
registered and would like to make a presentation, would you please register at
the back of the room.
Just
a reminder that 20 copies of your presentations are required. If you require
assistance with photocopying, please see the clerk of this committee.
I would also like to inform
the committee that a written submission has been received from Dan Sherbo, Business
Law Section, the
I would like to inform presenters that in
accordance with our rules a time limit of 10 minutes has been allotted for
presentations and five minutes for questions from committee members. As well,
in accordance with our rules, if a presenter is not in attendance, their name
will be dropped to the bottom of the presenters' list. If the presenter is not
in attendance when their name is called a second time, their name will be
removed from the presenters' list. We will now begin the public presentations.
The first individual is Mr.
Bruce King, private citizen.
Mr. Bruce King (Private Citizen): Good evening.
Madam
Chairperson: Mr. King, did you have copies of a presentation you wanted circulated?
Mr. King: Because my presentation is relatively informal, although I have got speaking notes, I do not think it is something that people will necessarily want to keep for posterity. So, no, I do not have copies.
Madam Chairperson: Thank you very
much. You can proceed, Mr. King.
Mr. King: I have saved a tree and your binders.
Madam
Chairperson: Yes, you have.
Mr. King: Good evening, I do not know the formalities of presenting to a committee. So, Madam Chair, Mr. Minister and committee members, how is that?
Madam
Chairperson: Perfect.
Mr. King: My name is Bruce King. I am a corporate
commercial lawyer with the law firm, Pitblado LLP. I am also the past chair of
the Business Law Section of the
I am, in fact, here to speak in support of passage of Bill 16, The Corporations Amendment Act. Just by way of background, the Business Law Section of the Bar Association has been lobbying for some time for amendments to be made to The Corporations Act. As committee members will, I presume, know there is concurrent jurisdiction between the federal government and individual provincial governments allowing for the incorporation of companies. Accordingly, both the federal government and the Manitoba government have the ability to allow corporations to become incorporated for the purposes of carrying on business here in Manitoba.
The federal statute which provides for incorporation is called the Canada Business Corporations Act. We, generally, as lawyers, refer to it as the CBCA. Both the CBCA and The Manitoba Corporations Act were passed back in 1976. The Manitoba Corporations Act was modelled after the CBCA, and so, in fact, there was effectively uniform legislation federally and provincially.
Now when you incorporate under a particular statute, the provisions of that statute then establish the rules that you have to comply with. For example, corporate governance, if you incorporate federally, its rules apply to corporate governance. If you incorporate provincially, The Manitoba Corporations Act establishes the rules.
For a number of years, from '76 on, there
was no particular advantage to incorporating under the federal statute at least
in terms of the statutory framework. The two statutes were uniform. This was a
good thing. Until recently, frankly, because of the lower fees charged by the
Manitoba Corporations Branch for incorporating in
In 2001, things changed. After a number of
years of consultation, I think about five years of consultation across the
country, the CBCA was amended by the federal government. The effect of those
amendments in 2001 was to give certain advantages if you chose to incorporate
federally. Those advantages then were not available to companies that happened
to be incorporated in
For example, after the 2001 amendments to
the CBCA, the related-party financial assistance restrictions found in section
42 of our statute no longer applied in the federal statute with section 44, but
they repealed section 44 and those restrictions disappeared. Those restrictions
remain in
Additionally, the CBCA in 2001 reduced the residency requirements for members of the board of directors. Those are just two examples of changes made to the CBCA in 2001 that have not yet been made to The Manitoba Corporations Act. Now, as long as the difference exists, there is a real incentive to incorporate federally as opposed to provincially. That adds to the cost of carrying on business in Manitoba. It also has the potential to create disadvantage to the legal profession and other professions in Manitoba.
Now as a result, I hope, in part, of the lobbying of the Bar Association and also frankly the initiative of the director of the Companies Office, a committee was formed to undertake consultation. I want to commend the department and the minister for the consultation, frankly. The department has a good record of consulting with the legal profession when it considers or proposes changes.
As a result, a committee was formed and back on June 15, 2004, we had a day-long consultation session. At that meeting, there was a broad representation from the legal and business community. We provided our recommendations in response to a consultation paper published by the department. This bill that you have in front of you adopts most of the recommendations made by the consultation committee. While the bill does not adopt all of the recommendations, we recognize that obviously policy choices need to be made by the government. Frankly, we are in support of the passage of the bill in its present form.
* (18:10)
If I can, I would like to also step away for just a moment from the passage of this particular bill and talk about timing. Timing is important. I encourage this committee not just to recommend the passage of the bill, but to recommend the prompt passage and implementation of this bill. As indicated above, the CBCA was amended in 2001. The amendments that were made to the CBCA should have and could have been made to our statute at an earlier date.
Now, I recognize there is competition for
time on the legislative agenda and there are significant areas of public policy
which you must deal with all the time. I hope to take this opportunity to tell
you, though, there are certain business-related statutes that form the basic
legal structure which allows business and organizations to operate in
Now, unlike the physical infrastructure,
such as highways, it is relatively inexpensive and uncontroversial for this
legal infrastructure to be maintained at a state-of-the-art level.
Unfortunately, these statutes rarely get your attention. This bill gives me the
opportunity to raise this point. I do so, quite frankly, not in the
self-interest of the legal profession, but in the interest of business.
Frankly, to the extent that you have modern, uniform commercial statutes in
place in
I would encourage the government, the opposition, the ministries that are involved to set aside regular time on your legislative agenda to keep our commercial infrastructure up to date. I know that members of the Department of Justice participate regularly in the Uniform Law Conference of Canada. They, together primarily with other government lawyers and policy makers across the country, design uniform statutes. One, for example, that you may have heard of is the Uniform Cost of Credit Disclosure Act. Another is something called the Uniform Securities Transfer Act.
These your constituents are not going to
know about and they are not going to mind if you pass them. Frankly, it would
facilitate the conduct of
Back to my original message, please pass Bill 16 and please pass it as soon as possible. Thank you.
Now, I do not know if I am supposed to wait for questions.
Madam Chairperson: Yes, please just stay there. Thank you very much. Are there questions for the presenter?
Hon. Greg Selinger (Minister of Finance): Yes, first of all, thanks for the presentation and I do actually hope you make a copy of it available. All of your remarks are put on Hansard. Sometimes, if there is any misunderstanding of what you said, the written record will help clarify that. So, even though you do not have copies, I think it was a good presentation.
My question to you is, were you one of the individuals involved in the consultation process with the Companies Office on this matter?
Mr. King: Yes.
Mr. Selinger: Thank you for confirming that. Other questions?
Madam Chairperson: Other questions?
Mr. David Faurschou (
Mr. King: I am reminded, finally, of when I was about 17 years old, I was here for Youth Parliament acting for two or three years, so this is coming back now. I should tell you who the other people were who were in Youth Parliament back in those days. Some of them have gone on to real political careers.
In answer to your question, I cannot tell
you that there is a specific, you know, timetable or deadline. I can tell you
that–and I am but one commercial lawyer; I have a client who is in active
consideration of continuing federally–once you are incorporated under a
particular statute, you can change. You can move to another province or you
could become federal, and that is called continuance. I know of at least one
significant, it is a publicly traded company that is currently a
Now, I cannot tell you the deadline, and I do not know whether that is important enough to change because I do not know what is involved with the Royal Assent process. But I will go back to my original message. Yes, I encourage you to enact and bring this into force as soon as possible.
Mr. Faurschou: I appreciate your candidness in your response. The other points that you mention in your presentation alluded to some recommendations that are not mentioned in this bill. Are you now then as a participant in this process, resulting in this bill, looking to start the process again to potentially address some of the not-mentioned issues?
Mr. King: The department, as I have indicated, has always been good about consulting. You know, frankly, none of the recommendations that were not implemented or were not implemented exactly as made are probably significant enough that there is going to be a big human cry from the legal profession. However, if the department initiates, as I suspect they may, sort of in an ongoing consultation process, then certainly I think that would be useful.
You will have seen, and I do not know whether this is the practice with provincial commercial statutes. But at least two federal statutes, one was the Bankruptcy and Insolvency Act, when it was passed about five years ago, they had a particular horizon, a five-year horizon, where they mandated a review, and a report had to be tabled to the federal government. Similarly, with the CBCA, when they amended that in 2001, they also put a five-year horizon and said that there will be a review process. So we are anticipating that there will be some element of review. In terms of keeping our statutes up to date, that type of mechanism might be something you would consider, or the government would consider.
Madam Chairperson: Mr. Faurschou, just before we go on, you have 10 seconds.
Mr. Faurschou: I just will then conclude by thanking the presenter for a very
thoughtful and insightful presentation this evening. I know that the minister
is interested in making certain that
Mr. Kevin Lamoureux (
Madam
Chairperson: Is
there leave? [Agreed]
Would you stay at the mike, please, Mr. King?
Mr. Lamoureux: Mr. King, the member from
* (18:20)
Mr. King: The short answer is no, no and no. The more detailed answer is, I kept personally brief notes. This was government representatives who were asking for consultation. They specifically indicated that what we were doing was being consulted, and government would make the ultimate policy decisions, as they have. I do not have a record. Going through my own personal notes, I know there were a couple instances where we made different recommendations that have come forward in the bill. Let me say that I, again, repeat that I am completely in support of the bill as it is presently promulgated, if that is the correct verb.
Mr. Lamoureux: Very shortly, can you indicate when it is the government would have been provided those recommendations from the consultation committee?
Mr. King: I cannot. I do not know. The recommendations would have been compiled by the department officials. I have not seen those, and I knew that I would not be privy to their final notes because they were recommendations, I believe, to the minister.
Madam Chairperson: Thank you very much, Mr. King.
The committee calls Dave Angus from the Winnipeg Chamber of Commerce.
Mr. Angus, do you have copies for the committee?
Mr. Dave Angus (President
and Chief Executive Officer,
Madam Chairperson: Good, good. I am glad to hear everybody is environmentally conscious. You can proceed, Mr. Angus.
Mr. Angus: Absolutely, the Chamber is fully supportive of sustainable development.
Thank you, Madam Chairperson. I am Dave Angus. I am the president of the Winnipeg Chamber of Commerce. Our organization is the largest business organization in the city of Winnipeg, close to 1,700 companies that employ close to 80,000 employees. The Chamber currently has more members than at any time in its 133-year history.
Obviously, it is our marketing department that wrote these notes for me here, but we fully support the changes articulated in Bill 16, The Corporations Amendment Act, and would echo the previous speaker's comments about expeditiously moving forward with this adoption.
There are five quick points that I want to make related from our perspective in terms of the business community. It is very important, we believe, for us to be in step with federal legislation. The previous speaker spoke about the changes and amendments that were made to the Canadian business corporation act back in 2001.
Sometimes you think only five years ago seems a quick time, but, in the business world with things changing so quickly, that is a long, long time for us to be out of step with federal legislation, so it is very important for us to bring consistency back with our provincial act to be consistent with the federal act.
Secondly, we always get concerned about a
level playing field, so we are concerned about the rules of the game here in
Thirdly, updating is important. Business
changes all the time. One point I would like to make is that, when there is an
act that really defines the rules of the game and the playing field that
business and
We would recommend that this particular act be reviewed on probably a five-year schedule so that it can make sure that it reflects the changes that are constantly happening within the business community. Whether it has to do with the latest business practices, whether it has to do with the use of technology, whether it has to do with some of the global aspects of business today, it is very important for us to update and review legislation that defines the rules of the game when it comes to the business community.
Finally, I think what the changes
represent is the kind of flexibility that is required in today's business
world. Businesses in
So, in closing, we fully support the changes that are identified through Bill 16. We believe it is important modernization of the bill, brings it in step with the federal legislation, provides uniformity and, what is most important to us, it provides certainty. That is what businesses thrive on.
They need certainty in terms of the rules of the game, and they also require a competitive environment and a level playing field. We believe those objectives are represented by the changes that are part of Bill 16, so we support fully the prompt passage of this particular bill.
Madam Chairperson: Thank you very much, Mr. Angus. Are there questions for the presenter?
Mr. Selinger: Yes, thanks for the presentation, Dave. Were there any members of your organization that were involved in the consultation process?
Mr. Angus: Members of our organization for sure were part of it; representatives of the Chamber from our Board of Directors, no.
Mr. Faurschou: Thank you very much, Mr. Angus, for coming out this evening and braving what apparently is a fair amount of snow falling outside.
The review process that you suggested here, perhaps, should it be then part of the legislation that as is included in the federal legislation, that provincial legislation should be harmonized in its same review timing, as a suggestion as you alluded to in your presentation?
Mr. Angus: Madam Chair,
through you to the previous speaker, I believe that not just this act or this
bill, but I think that whenever we take a look at amendments to bills or new
bills coming forward, defining the rules of the game, that thought should be
and discussion should be brought forward in terms of when that should be
reviewed. When is the sunset for this particular legislation because it is easy
to put it off and, so, I would suggest as just a matter of course, certainly
from my perspective, that if it defines the rules of the game for companies
within
Mr. Faurschou: Thank you for your comments in that regard because I personally believe that it is very important that we have a level playing field. We do have the competitive nature with our legislation, especially in this respect. I know that throughout the room there are department personnel and that it is their responsibility to make sure that that occurs, so I thank you for your comments this evening and appreciate it.
Madam Chairperson: Are there any other questions for the presenter? Seeing no other questions, we thank you very much for your presentation.
That concludes the list of presenters before us this evening. Is there anyone else in the audience that would like to present to Bill 16? Seeing no one, is it the will of the committee to proceed with clause-by-clause consideration of this bill? [Agreed]
Does the minister responsible for Bill 16 have an opening statement? Minister Selinger?
Mr. Selinger: Yes, thank
you, Madam Chairperson. I appreciate the presentations of the two presenters.
The bill does a number of things to modernize The Corporations Act.
The bill does the
following. It allows electronic participation in shareholders' and directors'
meetings which allows for more participation for people who are not necessarily
on site. It also allows for corporate recordkeeping and inspection by
electronic means, which I think is a very modern approach. It allows for a
greater proportion of a corporation's board of directors to reside outside of
It removes the obstacles in the legislation which the legal profession has advised us are unnecessary and have become moot. It also clarifies, and this is a greater measure of protection for shareholders, the standard of diligence that a corporate director must meet, failing which he or she will be financially responsible for certain obligations of the corporation. It also modernizes a number of filing and technical requirements.
So, with those brief comments, I propose we move through the clause by clause of what is on the bill.
Madam Chairperson: We thank the minister.
Does the critic from the official opposition have an opening statement?
Mr. Faurschou: My comments will be brief because I believe there is unanimous support for the passage of this bill in perhaps an expedited fashion as was mentioned by both presenters.
* (18:30)
I do want to take this
opportunity, though, to first off thank the minister for the co-operation in
both briefing and discussions that could see further amendment to The
Corporations Act here in
So, with that, Madam Chairperson, I would like to see if we would move forward clause by clause.
Madam Chairperson: We thank the member. During the consideration of a bill, the enacting clause and the title are postponed until all other clauses have been considered in their proper order. Also, if there is agreement from the committee, the Chair will call clauses in blocks that conform to pages, with the understanding that we will stop at any particular clause or clauses where members may have comments, questions or amendments to propose. Is that agreed? [Agreed]
Clauses 1 through 3–pass; clauses 4 and 5–pass; clauses 6 and 7–pass; clauses 8 through 11–pass; clauses 12 and 13–pass; clauses 14 and 15–pass; clauses 16 through 19–pass; clauses 20 and 21–pass; clauses 22 through 27–pass; clauses 28 through 34–pass; clauses 35 and 36–pass; clauses 37 and 38–pass; clauses 39 and 40–pass; clauses 41 and 42–pass; clauses 43 and 44–pass.
Shall clauses 45 through 47 pass?
Mr. Faurschou: Just in light of clause 47 coming into force upon the day of receiving Royal Assent, I think that we have heard from presenters tonight that we should recommend to the House speedy passage to Royal Assent, if at all possible, in consultation with our House leaders.
Mr. Selinger: Yes. With your support, I think we can persuade our various House leaders to come together and move it forward. I will be happy to work with you on that.
Mr. Lamoureux: Madam Chair, I just have two brief questions for the minister at this time, or I can wait until we get to the title of the bill, whichever you prefer.
Madam Chairperson: Can we just pass these clauses first?
Mr. Lamoureux: Yes.
Madam Chairperson: Clauses 45 through 47–pass; enacting clause–pass.
Shall the title pass?
Mr. Lamoureux: I would ask the minister if he could give indication, the consultation committee had a number of recommendations in which the government, I understand, incorporated what sounds like a good majority of those recommendations. I am wondering if he can indicate whether or not it is public information as to which recommendations were not accepted by the department.
Mr. Selinger: The Member for
Mr. Lamoureux: That is good that we know one of the recommendations that was not accepted, and I trust that there is likely more than one recommendation. If, in fact, the minister's office can provide a list of those recommendations, it would be beneficial.
The second question that I have is in regard to the timing. When were the recommendations first brought to the minister's attention?
Mr. Selinger: The recommendations were brought to my attention last summer for the fall session. We brought them forward, as you know, in a timely fashion, and now, with the co-operation of the members of the opposition, I am sure we will pass them in a timely fashion and proclaim them as soon as possible.
Mr. Lamoureux: I concur with the member from Steinbach. I think timely is likely past. It probably could have been done last fall if, in fact, that is what the government wanted to see happen, but I will conclude my remarks, Madam Chairperson, by just reminding the minister that he was going to get back to me in terms of the gas tax issue with the example of a one dollar. He has staff. I am sure he can kind of review it, or in Hansard in our last committee meeting. If he could get me that example, I would appreciate it. Thank you.
Madam
Chairperson: Title-pass.
Bill be reported.
That concludes the business before this committee. What is the will of the committee?
Some Honourable Members: Rise.
Madam Chairperson: The hour being 6:37, committee rise.
COMMITTEE ROSE AT: 6:37 p.m.
WRITTEN SUBMISSIONS PRESENTED
BUT NOT READ
Re: Bill 16–The Corporations Amendment Act
Further to the matter, please accept this correspondence as my support for the proposed amendments under Bill 16 and my desire that this Bill be passed. This support is given both in my capacity as a corporate commercial lawyer who practices extensively in this area of law and as well, Chair of the Business Law Section of the Manitoba Bar Association.
Should you require anything further, please do not hesitate to contact me.
Yours truly,
TAPPER CUDDY LLP
Per: DANIEL J. SHERBO, Partner