Budget seeks to expand financials’ diversity disclosure, virtual meetings

The government is planning to introduce broader diversity disclosure requirements in federal financial legislation and to facilitate the use of virtual corporate meetings.

In the 2023 budget tabled Tuesday, the federal government indicated it will propose amendments to the legislation governing federally regulated financial institutions that adopt the diversity disclosure requirements for directors and top management that were already introduced in federal corporate law.

In 2020, new diversity disclosure requirements for federally incorporated public companies took effect that expanded reporting requirements about the makeup of boards and senior management beyond gender — which is the focus of securities law requirements in this area — to include race, ethnicity and disabilities.

Among other things, the revised corporate law requirements also mandated disclosure regarding term limits and board renewal, the consideration of diversity in selecting directors and top management, and companies’ use of diversity targets.

“Requiring diversity disclosures for federally regulated financial institutions will benefit underrepresented communities, including women, Indigenous people, persons with disabilities, and Black and racialized people, by promoting awareness that can lead to their increased representation on boards and among senior management,” the government said in a statement accompanying today’s budget.

The government also plans to introduce legislative amendments that facilitate virtual-only corporate meetings and to set conditions for ensuring participation in these events.

Last year, the Canadian Securities Administrators (CSA) issued guidance that called on companies to ensure they meet their obligations under securities law when holding virtual or hybrid meetings. The guidance also encouraged firms to ensure shareholder participation in virtual meetings matches traditional, in-person corporate meetings.

In Tuesday’s budget, the government stated: “Mandatory diversity disclosures and conditions to ensure owner participation in virtual meetings may increase public confidence in these institutions by improving transparency between [federally regulated financial institutions], their owners, and the public.”

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.