Bill C-27

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First Reading

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	PART 3
	CORPORATE GOVERNANCE
	Application
Application	59. This Part applies to airport authorities set out in Part 1 of Schedule 1.
	Board
	General
Composition of the board	60. The board of an airport authority consists of a number of directors that is fixed by the by-laws of the authority and that number must be not less than 11 and not more than 15.
Term of office	61. (1) The directors of the board of an airport authority are appointed to hold office during good behaviour for a term of not more than three years so as to ensure, as far as possible, the expiry in any one year of the terms of office of not more than one third of the directors.
Renewal	(2) The terms of directors are renewable, but the total duration of the terms held by any director after the transfer date must not exceed nine years.
Exception	(3) Notwithstanding subsection (2), the total duration of the terms held after the transfer date by one director on the board of any airport authority may exceed nine years, but may not exceed 12 years.
Transitional provision	(4) The directors holding office on the day on which this Act is assented to may continue to hold office for a period of three years or until the expiry of their term, whichever occurs first.
Reappointmen t	(5) The directors holding office on the day on which this Act is assented to may be appointed as directors if they meet the requirements of subsections (2) and (3) and the other requirements of this Act.
	Nomination, Appointment and Removal of Directors
By-laws	62. The by-laws of an airport authority must provide for the process of nomination, appointment and removal of directors.
Appointments	63. (1) Subject to subsections (10) to (14), each director of an airport authority must be nominated or appointed by a selecting body.
Minister	(2) The Minister must appoint two directors.
Province	(3) The government of the province in which the airport is located may appoint one director.
Regional authorities and municipalities	(4) Every airport authority must provide in its by-laws for the nomination of a number of directors by regional authorities or municipalities of the region in which the airport is located that are designated in the by-laws as selecting bodies. The number must not be less than three and not more than five. Subject to subsection (7), at least one director must be appointed
	(a) from persons who reside in the municipality in which the airport that was leased to the airport authority by Her Majesty in right of Canada on the transfer date is located; and
	(b) from persons who reside in the principal municipality served by that airport, if it is not the municipality in which the airport is located.
Non-governm ental entities	(5) Every airport authority must fix in its by-laws the number of directors to be nominated by non-governmental entities designated in the by-laws as selecting bodies, and that number must be not less than three and not more than five. The entities designated in the by-laws must be chosen from at least two of the following groups:
	(a) the national association of domestic air carriers;
	(b) economic organizations;
	(c) provincial associations of lawyers, engineers or accountants;
	(d) community organizations; and
	(e) labour organizations, excluding bargaining agents for any authority employees.
Number of municipalities , regional authorities and entities	(6) The number of municipalities, regional authorities and non-governmental entities designated as selecting bodies under subsections (4) and (5) may exceed the respective number of directors that are to be appointed under those subsections.
Consent	(7) The municipalities and regional authorities referred to in subsection (4) and the non-governmental entities referred to in subsection (5) can become selecting bodies only with their consent, and they may cease to be selecting bodies by resigning.
Minimum number of nominees	(8) A selecting body referred to in subsection (4) or (5) must, in accordance with this section and section 65, nominate at least two individuals for each office for which that selecting body is making a nomination.
Maximum number	(9) No more than three directors may be appointed from the group of individuals nominated by any one municipality, regional authority or non-governmental entity.
Appointments by directors	(10) The board must appoint the directors from the group of individuals nominated under subsections (4) and (5). In the case of the constitution of the first board of directors of a new airport authority referred to in section 36, the directors appointed under subsections (2) and (3) must appoint directors from the group of individuals nominated under subsections (4) and (5).
Appointment of other directors	(11) The directors appointed under subsections (2), (3) and (10) may appoint up to three other directors. They must appoint at least one director with knowledge and experience in the air carrier industry or who is chosen from a list of candidates identified by a national association of domestic air carriers, unless there is a director on the board who has been nominated by such an association or has knowledge and experience in the air carrier industry.


Successors	(12) The board must appoint the successors for any directors appointed under subsection (11).
Provincial nominating power not exercised	(13) If a province does not exercise its power under subsection (3) within three months after the date on which the office for which the province is authorized to make an appointment becomes vacant, the group of directors already appointed or the board may appoint a director to fill the vacancy. A director who is appointed under this subsection holds office for a term of one year.
Nominating power not exercised	(14) If a selecting body referred to in subsection (4) or (5) does not exercise its power to nominate within three months after the date on which the office for which the selecting body is authorized to make a nomination becomes vacant and none of the other selecting bodies have made nominations for that position, the group of directors already appointed or the board may appoint a director to fill the vacancy. A director who is appointed under this subsection holds office for a term of one year.
Cessation	(15) Any municipality, regional authority or non-governmental entity designated as a selecting body under subsection (4) or (5) that does not exercise its power to nominate in accordance with that subsection for three consecutive years ceases to be a selecting body.
Skills, knowledge and experience	64. The directors must collectively have the skills and knowledge necessary to carry out the duties of the board, and have the necessary experience in law, engineering, accounting, management and the air carrier industry.
Providing information in case of vacancy	65. (1) When a director ceases to hold office or there is an upcoming vacancy, the airport authority must, without delay, notify the relevant selecting bodies of the vacancy and submit to the selecting bodies information regarding the required qualifications for becoming a director and the particular skills, knowledge and experience needed by the board at that time.
Consideration	(2) The selecting bodies must consider the information referred to in subsection (1) before nominating or appointing a director.
Consultation	(3) Before nominating or appointing a director, the selecting bodies must consult with the governance committee established by the board under section 85.
Information session	66. Before a director's initial appointment, the airport authority must conduct at least one information session for individuals interested in becoming directors on the purpose of an airport authority, the respective roles of the authority and the Minister, and the powers, duties and functions of directors, including duties imposed by any law and by the conflict of interest rules adopted under section 91.
Removal by selecting body	67. A selecting body referred to in subsection 63(2) or (3) may revoke the appointment of a director whom it has appointed for any cause. It must revoke the appointment if the selecting body determines that the director
	(a) ceases to be eligible under subsection 70(1), (2) or (4);
	(b) has disclosed confidential information contrary to this Act; or
	(c) has breached the conflict of interest rules for directors.
Resolution requiring removal	68. The board may revoke the appointment of a director whom it has appointed for any cause, including conduct that brings the reputation of the airport authority into disrepute, by a resolution that is approved by two thirds of the board, not including the director in question. It must revoke the appointment if the board determines that the director
	(a) ceases to be eligible under subsection 70(1), (2) or (4);
	(b) has disclosed confidential information contrary to this Act; or
	(c) has breached the conflict of interest rules for directors.
Resignation	69. (1) A director may resign by sending a letter of resignation to the chairperson of the board and a copy to the selecting body that nominated or appointed the director.
Effective date of resignation	(2) The resignation of a director becomes effective on the day on which the letter of resignation is received by the chairperson or on the day specified in the letter of resignation, whichever is later.
	Directors
Ineligibility by reason of activities	70. (1) A person is not eligible to hold office as a director if they
	(a) are, or within the two years preceding their appointment have been,
	(i) a member of the Senate, the House of Commons or the legislature of a province, or
	(ii) an elected official of a municipality or regional authority; or
	(b) are, or within the year preceding their appointment have been,
	(i) an employee or agent of Her Majesty in right of Canada or a province, or an employee or agent of a Crown corporation,
	(ii) an officer or employee of a municipality or regional authority,
	(iii) the chief executive officer or an employee of the airport authority,
	(iv) a director, officer or employee of an air carrier,
	(v) a shareholder of a corporation in which the airport authority holds an ownership interest,
	(vi) an individual who is required to file a return under the Lobbyists Registration Act or a similar provincial statute and who, in the opinion of the board, is engaged or perceived to be engaged in lobbying activities with respect to the business or affairs of an airport authority or on behalf of any person or organization that is part of the air industry, or
	(vii) an individual who is a partner, associate or employee of a person referred to in subparagraph (vi), unless they are subject to a set of rules that prevents information from flowing between them and that person.
Ineligibility by reason of personal circumstances	(2) A person is not eligible to hold office as a director if they
	(a) are not a Canadian citizen or a permanent resident within the meaning of the Immigration and Refugee Protection Act;
	(b) maintain their principal residence outside Canada;
	(c) are less than 18 years of age;
	(d) are related to a director or officer of an airport authority;
	(e) have been declared mentally incompetent by a court in Canada or elsewhere;
	(f) have the status of an undischarged bankrupt; or
	(g) have been convicted of an indictable offence.
Ineligibility by reason of relationships	(3) A person is not eligible to be appointed as a director if they have, or within the six months preceding their appointment have had, a relationship with the airport authority or a selecting body that, at the time of the appointment, interferes or appears to interfere, in the opinion of the board, with the person's ability to act in the best interests of the authority. A person who is a director, officer or employee of any corporation that has, or has had, such a relationship within that period is not eligible for appointment.
Other grounds for ineligibility	(4) A person is not eligible to hold office as a director if they have not attended an information session referred to in section 66 or have not provided a declaration referred to in section 95.
Duty of care	71. (1) Every director of the board of the airport authority and every officer of the authority must, in exercising their powers and carrying out their duties,
	(a) act honestly and in good faith with a view to the best interests of the authority; and
	(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
Presumption of compliance	(2) A director or officer discharges their duty under subsection (1) if the director or officer relies in good faith on
	(a) financial statements of the airport authority that are represented to the director or officer by an officer of the authority or in a written report of the auditor of the authority as fairly reflecting the financial condition of the authority; or
	(b) a report by a person whose profession lends credibility to a statement made by them.
Independent advice	72. (1) The board or a director may, in accordance with the by-laws of the airport authority and at the expense of the authority, retain the services of a professional who is independent from the authority to enable the board or director to exercise their powers and carry out their duties and functions.
Mandatory by-laws	(2) The airport authority must adopt by-laws respecting the retention of the professional and payment of their expenses.
Indemnificati on	73. (1) An airport authority may indemnify a director or officer or former director or officer of the authority against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred in respect of any civil, criminal, administrative, investigative or other proceeding in which the director or officer is involved because of their association with the authority.
Advance of costs	(2) An airport authority may advance moneys to a director or officer for the costs, charges and expenses of a proceeding referred to in subsection (1). The director or officer must repay the moneys if they do not fulfil the conditions of subsection (3).
Limitation	(3) An airport authority may not indemnify an individual under subsection (1) unless the individual
	(a) acted honestly and in good faith with a view to the best interests of the authority; and
	(b) had, in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, reasonable grounds for believing that their conduct was lawful.

Bill C-27

PART 3

CORPORATE GOVERNANCE

Application

Board