Accountability is contagious. Taking their lead from efforts to clean up the U.S. accounting industry, six of Canada’s largest firms have asked the federal government to tighten up its oversight of corporate governance and to introduce reforms that mirror those being set forth in America.
The companies contend that Canada’s capital markets are in danger of becoming "marginalized" if Ottawa does not do something about the "troubling" divide between Canada and the Unites States in the area of corporate governance.
Six of Canada's largest companies have quietly banded together to urge their federal government to introduce corporate governance reforms as stringent as those in the United States to reinvigorate trust in the country's capital markets.
They also cite Canada’s dismal record for enforcing existing regulations and they take aim at the Toronto Stock Exchange’s voluntary governance rules.
The six companies are Alcan Inc., BCE Inc., Canadian National Railway Co., Encana Corp., Royal Bank of Canada and TransCanada PipeLines Ltd. Last fall they launched a lobbying group called the Advisory Committee on Corporate Responsibility Review. Because these large Canadian companies are interlisted on stock exchanges in both Canada and the United States, they are already in the midst of complying with the U.S. rules set forth in the wake of the Sarbanes-Oxley Act.
"We need to be in a capital market that has every bit the reputation for integrity that the U.S. market is legally enforcing," John Kazanjian, a Toronto corporate lawyer and counsel to the advisory committee, said in an interview.
So far the committee has kept a low profile, but its very existence shows the increasing momentum in Canada for stricter corporate governance standards. Up until now, TSX president Barbara Stymiest has dominated the debate, arguing that Canada needs fewer, not more, rules and should not copy Sarbanes-Oxley.
Mr. Kazanjian said the committee has not made public statements because it wants to provide lawmakers with an idea of how large, interlisted companies view the issues. "To do that, we don't need to win over any public support," he said. "We need to be persuasive and trusted in conversations with government."