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Canada's new Bill S-211 “Fighting Against Forced Labour and Child Labour in Supply Chains Act” or “Modern Slavery Act” came into effect in January 2024. The purpose of this Act is to reduce the use of forced and child labour in supply chains by increasing industry awareness and transparency.1
The bill imposes reporting obligations on government institutions and certain private entities in Canada that produce, sell, distribute or import goods or that control entities that do so.2 These reports must be made available to the public, including by publishing it in a prominent place on its website3, and subject entities that are incorporated under the Canada Business Corporations Act (CBCA) must also provide the report to each shareholder, along with its annual financial statements.4 Those entities that are required to report must file their first reports with the government by May 31, 2024, and each year thereafter.5
Since the Modern Slavery Act came into effect, Computershare has received questions about how companies can fulfill the reporting requirements of this new legislation. Here are some considerations.
The first question that clients are facing is whether the legislation applies to them. Most law firms have published a commentary on application of the Act. Even with the most recent guidance published March 5, 2024 by Public Safety Canada, there may be areas for potential interpretation.6 Clients are encouraged to consult with their external counsel to determine their legal obligations.
Will the Bill apply to your business?
According to a commentary published by Cassels in January of this year, the Act defines an “entity” as a corporation, trust, partnership and organization that:
- is listed on a stock exchange in Canada;
- has a place of business in Canada, does business in Canada or has assets in Canada and that, based on its consolidated financial statements, meets at least two of the following conditions for at least one of its two most recent financial years:
- had at least $20 million in assets;
- had generated at least $40 million in revenue, and
- employed an average of at least 250 employees; or
- is prescribed by regulations.7
The Act applies broadly and requires reporting by “entities” that:
- produce, sell, or distribute goods in Canada or abroad;
- import goods produced abroad into Canada; or
- control an entity engaged in the aforementioned activities.8
Once you have determined that your company has reporting obligations, there can be discussion about distribution of the report.
How are CBCA incorporated companies addressing the requirement to provide the Modern Slavery Report (MSR) to shareholders?
With the December 31 fiscal year end and spring dates for their annual shareholder meeting, many companies provide their annual financials to shareholders with meeting materials. The distribution of the MSR has been a new item to consider for the mailings of meeting notices and materials. If this is the case for your company, Computershare can help. Options we can facilitate include::
- Where there is an annual financial report mailing to shareholders, the MSR can be included.
- Where annual financials are included with proxy materials, the MSR can be an additional insert.
- Where Notice and Access is used for proxy materials and delivery of the annual report, the MSR can be included with the fulfillment pack materials.
- A page insert can be included with the proxy materials directing shareholders to their website for the report.
There are many methods to provide the MSR to shareholders. Computershare is available to discuss the path that your company is considering for this reporting requirement.
How to handle future reporting requirements?
Looking beyond the 2024 proxy season, some clients may include the MSR within their 2024 annual report as part of the Environmental, Social and Governance (ESG) section.
If your company wants to expand your ESG reporting, or even get started, Computershare hosted a webinar in January covering ESG reporting developments for Canadian companies.
Topics included the Forced and Child Labour in Supply Chains Act, developments in the International Sustainability Standards Board (ISSB) and tips for getting started on the ESG reporting journey. The webinar is available on-demand.
If you have any questions about how Computershare can support the distribution of the Modern Slavery Report to your shareholders or on general ESG reporting, please contact your Relationship Manager or complete the form.
Latest Computershare Connection Articles
1 Government of Canada Public Safety bulletin: Forced Labour in Canadian Supply Chains
2 Legislative Summary of Bill S-211: An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff (parl.ca), section 1.
3 Fighting Against Forced Labour and Child Labour in Supply Chains Act, SC 2023, c 9, s 13(1)
4 Fighting Against Forced Labour and Child Labour in Supply Chains Act, SC 2023, c 9, s 13(2)
5 Government of Canada Public Safety bulletin: Prepare a report
6 The Canadian Government Updates Guidance to Forced and Child Labour Act but Questions Remain | Knowledge | Fasken
7 Canada’s Modern Slavery Legislation is Now in Force – What You Need to Know | Cassels.com
8 Canada’s Modern Slavery Legislation is Now in Force – What You Need to Know | Cassels.com
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