Tory MP Drafts Bill Proposing to Hold Corporate Executives Accountable for ‘Activist Statements’

Conservative MP Tom Kmiec rises during question period in the House of Commons on Parliament Hill in Ottawa on March 26, 2021. (The Canadian Press/Sean Kilpatrick)

A Conservative MP is drafting a bill that proposes to hold officers and directors of large publicly traded companies accountable to shareholders whenever they make “activist statements” that have nothing to do with their line of business.

Tom Kmiec, who represents the riding of Calgary Shepard, says the bill would ensure that the interests of shareholders of large public corporations are prioritized above any agendas pushed by management that are unrelated to their business, yet can impact their bottom line and share value.

“I’m going to put shareholders back in the driver’s seat in charge of the company, making sure to keep [the senior executives and board of directors] accountable,” Kmiec told The Epoch Times. “The purpose of business is to return value to shareholders, not to engage in the public debate of civic discourse.”

The private member’s bill will target publicly traded companies registered under the Canada Business Corporations Act (CBCA) that have market shares worth $100 million or more. It seeks to amend paragraph 1 and subparagraph 1.1 of Section 122 of the CBCA, which deal with the “duty of care of directors and officers” and the “best interests of the corporation,” respectively.

In 2019, the Liberal government amended the CBCA through Bill C-97, which expanded the scope of fiduciary duties of corporations beyond the interests of shareholders.

“It was drastically expanded to include a whole bunch of different other concepts like the long-term interests of the corporations, the environment, their employees, retirees, pensioners, creditors, consumers, and governments,” Kmiec said, calling the changes “stakeholder capitalism.”

‘Everything Is Becoming Political’

The Tory MP stressed that stakeholder capitalism is a system pushed by politicians who “identify with the left wing,” who maintain that corporations should support progressive causes as they have “a responsibility to all of society.”

“When I hear things like that, all I hear is [that] the interests of the owners of the company don’t matter anymore, and that shareholders should have to bear the costs of decisions that will very likely reduce their retirement … payments they’ll receive in the future, and that will hurt them at the end of the day because there’s another interest being played into here,” he said.

With the changes made to the CBCA three years ago, corporations are now weighing in on almost every public policy issue, Kmiec said, and sometimes putting out statements “that are just mobbing, and contributing to this irrational debate we sometimes have on unimportant complex issues.”

“Back in 2019 when the federal government made these changes, they were warned that something like this would happen, that companies will start going off track instead of focusing on their bottom line,” he said.

“This is what Canadians don’t want. When I go buy my groceries, just like the rest of my constituents, they don’t want to be moralized by their grocer, their retailer, or their car dealership on issues of social justice or on civil cultural issues that are going on right now.”

“Everything is becoming political,” he added.

Duty of Care to Shareholders

Kmiec says his bill would not prevent corporations from making statements on political or social issues, but would require the “social media, communication people” to seek approval from their board of directors before they post activist statements beyond the scope of their business purpose.

“The board of directors has to approve whatever statements are going to be made on any social media outlets,” he said. “After they approve it, at the next annual general meeting of the company, the shareholders will get the final say to … approve it or get to cancel it at that moment.”

Should there be any damage caused to the company’s reputation, bottom line, or share value as a result of the social media post, shareholders will have the authority to take legal action against the directors, if the bill passes in Parliament.

“Shareholders will now be able to action that in court and sue the board of directors for harming the company, and it will extend the duty of care principle already in the act to the shareholders so that the board of directors has both a fiduciary responsibility and a duty of care to its shareholders,” Kmiec explains.

He said the bill would allow companies to make statements that are “material” to their business.

“If Wendy’s restaurant were to talk to me when I enter there about their grass-fed beef or how they source or how they never freeze their beef, that’s entirely OK,” he said. “But what you don’t want to hear about is Wendy’s restaurant talking about climate change when you enter and you’re buying a burger.”

The MP foresees pushback from the federal government and “a few people who are woke.”

“I fully expect the gatekeepers to be all out there defending big businesses being allowed to take a side in political debate, but I just think that’s not their role,” he said.

“A company’s primary purpose is to return a profit, and profit should not be a dirty word. Profit is the outcome of success of delivering a service or product that people want and are willing to pay for.”

The bill is expected to be introduced this fall.