The Past Speaks

The Canadian government has announced plans to reform the country’s system of corporate governance. A 90-day consultation period has begun: written submissions will be accepted until 11 March 2014.

Issues that have been identified for review as part of the consultation process include:

• greater transparency of the ownership of corporations to help ensure that they are not used for tax evasion, money laundering or terrorist financing
• the adequacy of corporate governance legislation in preventing bribery and corruption
• the diversity of corporate board members and management teams
• the rules for takeover bids
• the use of the CBCA’s arrangement provisions to restructure insolvent businesses
• the role of corporate social responsibility

So far, most the proposals for specific corporate governance reforms have been made by self-interested parties (i.e., current players in the investment sector rather than academics). For instance, the Canadian Coalition for Good Governance, which represents many of the country’s big pensions, has been urged the government to reform corporate law by introduction of a mandatory majority voting rule. Canada and the United States are the only major countries that do not require majority votes for directors to be elected to boards.

Corporate governance clearly matters. Indeed, reforming the relationships between shareholders, board members, and managers may matter more to Canada’s future than reforming the Canadian parliament. Vast numbers of Canadian academics have offered their opinions on the future of the unelected upper chamber or the proposed Reform Act. We’ve heard far less from academics about corporate governance reform. In particular, Canada’s historians have been silent on this issue, which is odd because corporate governance systems are deeply rooted in national histories. I’m very aware of this issue as I’m currently doing some work on the comparative history of corporate governance with Kevin Tennent of the University of York Management School.

The question right now is: will Canada’s historians step up to the plate?