This enactment amends the Canada Business Corporations Act to provide that a corporation’s purpose is to pursue its best interests while also operating in a manner that

(a) benefits the wider society and the environment in a manner proportionate to its size and the nature of its operations; and

(b) minimizes any harm that the corporation causes to the wider society and the environment, with the objective of eliminating such harm.

It also makes related amendments.

Preamble

Whereas Parliament recognizes that a review of the purpose of a corporation is required as a result of the social and environmental challenges of the 21st century;

Whereas corporations should focus on producing profitable solutions for the problems of people and the planet and not on profiting from creating problems;

Whereas directors and officers have historically had a fiduciary duty to act only in the best interests of their corporations and this has resulted in social and environmental factors being regularly considered as either risks or opportunities for those corporations’ operations and profitability, not in relation to those corporations’ impacts on broader society and the environment;

Whereas Parliament considers it essential for corporations to have a purpose that encompasses both the pursuit of their best interests and benefits to the wider society and the environment; and

Whereas Parliament considers it essential that corporations periodically disclose information to the public about these impacts and benefits;

Now, therefore, His Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

Purpose of corporation

(1.‍1) The articles may set out the purpose of the corporation, provided that the purpose is consistent with section 14.‍1.

PART II.‍1 

Purpose of a Corporation

Purpose of corporation

14.‍1 The purpose of a corporation is to pursue its best interests while also operating in a manner that

• (a) benefits the wider society and the environment in a manner proportionate to its size and the nature of its operations; and

• (b) minimizes any harm that the corporation causes to the wider society and the environment, with the objective of eliminating such harm.

  End of inserted block

Directors and officers — duty to pursue purpose of corporation

122 (1) Every director and officer of a corporation Insertion start , Insertion end in exercising their powers and discharging their duties Insertion start , Insertion end shall act honestly and in good faith

• (a) with a view to the best interests of the corporation; and

• (b)  Insertion start to pursue those interests while ensuring that the corporation operates in a manner that Insertion end

  • Start of inserted block

    (i) benefits the wider society and the environment in a manner proportionate to its size and the nature of its operations, and

  • (ii) minimizes any harm that it causes to the wider society and the environment, with the objective of eliminating such harm.

    End of inserted block

Directors and officers — duty of care

(1.‍1)  Insertion start Every director and officer Insertion end of Insertion start a Insertion end corporation Insertion start , in exercising their powers and discharging their duties, shall exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances, including towards Insertion end

• (a) shareholders Insertion start ; Insertion end

• (b) employees Insertion start ; Insertion end

• (c)  retirees and pensioners Insertion start ; Insertion end

• (d) creditors Insertion start ; Insertion end

• (e) consumers Insertion start ; Insertion end

• (f) governments Insertion start ; Insertion end

• (g) the environment; and

• (h) the Insertion start corporation’s Insertion end long-term interests.

Defence — good faith

123 (5) A director has complied with his or her duties under Insertion start paragraph 122(1)‍(a) and Insertion end subsection Insertion start 122(1.‍1) Insertion end if the director relied in good faith on

• (a) acted honestly and in good faith Insertion start to advance the purpose Insertion end of the corporation or, as the case may be, to Insertion start advance the purpose Insertion end of the other entity for which the individual acted as Insertion start a Insertion end director or officer or in a similar Insertion start such Insertion end capacity at the corporation’s request; and

PART XIV.‍2 

Disclosure Relating to Impacts on the Wider Society and the Environment

Annual report

172.‍2 (1) At every annual meeting of its shareholders, the corporation shall report in the prescribed manner on its impacts on the wider society and the environment, including on the measures it has taken to minimize any harm it causes to the wider society and the environment.

Single or joint report

(2) A corporation may comply with subsection (1) either by providing a report in respect of the corporation or by being party to a joint report in respect of affiliated corporations.

Prescribed standards

(3) Regulations prescribing how the report referred to in subsection (1) shall be made may require the corporation or affiliated corporations to

• (a) select a prescribed third-party standard for assessing the corporation’s or affiliated corporations’ impacts on the wider society and the environment; and

• (b) assess the corporation’s or affiliated corporations’ impacts on the wider society and the environment against that standard for the most recently completed financial year.

  End of inserted block

Prescribed standards

(4) Regulations prescribing how the report referred to in subsection (1) shall be made may prescribe different manners that are based on the corporation’s size.

Information to shareholders

(5) The corporation shall provide the report referred to in subsection (1) to each shareholder — except to a shareholder who has informed the corporation in writing that they do not want to receive that information — by sending the information with the notice referred to in subsection 135(1) or by making the information available along with a proxy circular referred to in subsection 150(1).

Information to Director

(6) The corporation shall concurrently send the report referred to in subsection (1) to the Director and make it available to the public, including by publishing the report in a prominent place on the corporation’s website.

• (c) it appears to be Insertion start consistent with the purpose Insertion end of the corporation or its subsidiary that the action be brought, prosecuted, defended or discontinued.

Presumption — proper person

(3) A person who makes an application under subsection (1) in relation to the duties of a director or officer under paragraph 122(1)‍(b) is deemed to be a proper person under paragraph (d) of the definition of complainant in section 238 if the court is satisfied that the person is acting in pursuit of the interests of the wider society or the environment.