Canada is a perennially popular country to do business in, whether as a Canadian company or a foreign investor. It regularly appears on Forbes’ list of the best countries for business, and is an appealing jurisdiction for IPOs, with the Toronto Stock Exchange becoming an increasingly popular exchange for foreign companies.
But – as with any other jurisdiction – doing business in Canada comes with its own legislation, regulations and requirements, especially when it comes to governance, risk and compliance.
With Canadian board directors who fail to comply with national and local statutes potentially liable in court for their actions, it’s imperative that anyone responsible for compliance and corporate governance understands their duties and responsibilities.
Here we look at all the issues you should be aware of around governance and compliance in Canada.
Being Compliant When Doing Business in Canada
As with any other jurisdiction, operating in Canada comes with its own country-specific regulations and legislation. Some echo those in other countries, covering areas like employment and labor; the environment; data protection. Others, like the French language requirements of operating in Quebec, are particularly Canadian rules.
Employment and Labor Laws
Canadian Workplace Standards comprise requirements around labor laws, workplace standards, health and safety standards and labor relations programs.
There is a split between federal and provincial governance of these requirements; while labor relations and employment largely fall under provincial jurisdiction, some industries are governed by federal regulations.
This can cause complexity for organizations operating across a number of provinces; compliance teams must ensure that they are aware of, and meet, the various requirements they are subject to. Conditions around issues such as wages, working hours and time off, pregnancy and parental leave can be subject to both federal and provincial rules. As if this wasn’t enough, Canadian labor laws – both federal and provincial – underwent a number of changes in 2019, adding to the regulatory burden falling on compliance teams.
The Chief Compliance Officer needs confidence that their local offices are able to fulfil the requisite requirements. The challenge of keeping track of regulatory obligations, let alone compliance with them, across numerous offices or subsidiaries shouldn’t be under-estimated.
Manual processes risk a disorganized approach that leaves your business open to the risk of compliance breaches. As a result, firms are increasingly turning to compliance software to streamline and centralize their governance and compliance processes across all their offices and entities.
As with employment laws, the passing and regulation of environmental legislation in Canada is split between federal and provincial governments.
Federally-instituted laws include the Canadian Environmental Protection Act, the Canada Shipping Act, the Arctic Waters Pollution Prevention Act and the Fisheries Act. Meanwhile, issues such as agriculture, forestry, mining and hydroelectric development primarily fall under provincial governance, meaning that the provinces are also responsible for passing a significant number of environmentally-focused laws.
The government’s increased attention to environmental issues in recent years has brought these laws into sharp focus. And while the objective of greater environmental awareness cannot be criticized, this again increases the regulatory burden facing compliance teams.
Again, the ability to oversee both central and local efforts is key. This can be a particular challenge because, as law firm Blake, Cassels & Graydon LLP points out, ‘Environmental legislation and regulation is complex and often provides environmental regulators with considerable discretion in the enforcement of the law’.
This complexity and subjectivity adds another layer of complication to organizations trying to manage, record and evidence environmental credentials across their Canadian operations.
The spotlight that environmental transgressors find themselves under – and the potential financial and reputational penalties – make it imperative that businesses remain, as Blake, Cassels & Graydon LLP note, ‘fully informed on what the relevant environmental laws allow and prohibit, and how to respond to the demands of both governments and the public’.
Again, a robust and comprehensive approach is essential here to ensure that your various operations meet their commitments relating to both provincial and federal laws. It’s important to implement an efficient governance framework for your subsidiaries and offices. This will help to ensure your approach is comprehensive without creating duplication or inefficiency, and give the Board assurance that you are tackling your environmental responsibilities effectively.
French Language Laws
If you operate in Quebec, the Charter of the French Language makes French the official language of the province and sets out detailed rules governing the language used by individuals and companies that carry out business there. The Charter specifies that commercial documentation, products and services – including websites and packaging – should be available in French.
Data and Privacy Laws
Every business is now surely familiar with GDPR, the General Data Protection Regulation governing how EU citizens’ data is controlled.
Those operating in Canada are also subject to additional requirements; the Personal Information Protection and Electronic Documents Act (PIPEDA) and CASL, Canada’s Anti-Spam Legislation, which according to Deloitte is ‘one of the toughest laws of its kind in the world, making its application and interpretation particularly thorny’.
As with environmental legislation, data protection is a headline-grabbing issue. Just this week, retail firm H&M incurred a record fine for GDPR failings. The importance of adhering to data laws cannot be underplayed, and as with the other laws covered here, Canadian CCOs will want to ensure that their organizations take a rigorous approach to compliance.
Ensure a Meticulous Approach to Canadian Compliance
This quick canter through some of the rules governing organizations operating in Canada demonstrates the breadth and complexity of the challenge facing compliance teams. Any firm carrying out business in Canada needs to understand the interplay between provincial and federal laws, and ensure they have measures in place to comply with them.
A clear oversight of governance across offices and subsidiaries is essential. A robust approach, based on reliable and comprehensive data, is imperative.
To deliver on this requirement, many organizations are turning to compliance software for more efficient and consistent compliance management; software like Diligent Compliance, which can help CCOs and their teams to measure the effectiveness of their current approach, identify gap and drive improvements. Find out more here.