On February 15, 2025, the Department of Finance proposed Diversity Information Disclosure Regulations¹ (the Proposed Diversity Regulations) for distributing federally-regulated financial institutions (FRFIs) under the Bank Act, Trust and Loan Companies Act and Insurance Companies Act. 

The Proposed Diversity Regulations aim to enhance the representation of women, Indigenous peoples, persons with disabilities and visible minorities in leadership roles within banks, trust and loan companies and insurance companies.

The Proposed Diversity Regulations align with the “comply or explain model” introduced under the Canada Business Corporations Act in January 2020, and are part of a broader effort to align corporate governance with federal best practices. Federal banking legislation has not previously required FRFIs to disclose diversity information about senior leadership positions.

Overview of Proposed Diversity Regulations

The Proposed Diversity Regulations require distributing FRFIs to disclose information about the representation of designated groups in senior management positions. The Proposed Diversity Regulations use the following definitions:

Designated groups include, but are not limited to, women, Indigenous peoples,² persons with disabilities and members of visible minorities.

Senior management positions are defined as the chair of the board of directors; the vice-chair of the board of directors; the president; the chief executive officer; the chief financial officer; any vice-president in charge of a principal business unit, division or function including sales, finance or production; and any officer who reports directly to the board of directors, the chief executive officer or the chief operating officer.

The Proposed Diversity Regulations mandate that FRFIs disclose the following information (Diversity Disclosure) with respect to the parent entity:

1. Term Limits and Board Renewal: Whether the entity has adopted term limits or other mechanisms for board renewal, along with a description of these mechanisms or reasons for not adopting any.
2. Written Policy on Diversity: Whether there is a written policy for identifying and nominating candidates from designated groups, and if so, details about the policy's objectives, key provisions, implementation measures and effectiveness. 
3. Representation Consideration: Whether the level of representation of designated groups is considered when nominating directors and appointing senior management, and how this consideration is implemented or reasons for not considering it.
4. Targets for Representation: Whether there are specific targets for the representation of designated groups on the board and in senior management, progress towards these targets and reasons for not adopting any targets if applicable. Major subsidiaries that account for 30% or more of the parent entity’s consolidated assets or revenue must also disclose targets for representation.
5. Number and Proportion of Designated Groups: The number and proportion of directors and senior management members from each designated group. Major subsidiaries that account for 30% or more of the parent entity’s consolidated assets or revenue must also disclose the number and proportion of designated groups in director and senior management roles .

Diversity Disclosure will be required at the same time as the notice of the annual meeting is sent to the owners (e.g., shareholders) of the FRFI. The Number and Proportion of Designated Groups will be reported in a standardized form set out in the Proposed Diversity Regulations to ensure consistency and comparability across different FRFIs.

Conclusion

The Proposed Diversity Regulations aim to enhance transparency and accountability in the financial sector by providing stakeholders with important data on FRFI governance practices. Persons interested in the Proposed Diversity Regulations may make representations concerning the same within 30 days after the date of publication (i.e., by March 17, 2025).

For more information regarding the Proposed Diversity Regulations or diversity disclosure requirements generally, please contact the authors, Bill Gilliland and Heather Bonnell.

The authors would like to thank articling student Olivia Graham for her assistance with this article.

1. The Diversity Information Disclosure (Trust and Loan Companies) Regulations, the Diversity Information Disclosure (Banks and Bank holding Companies) Regulations, and the Diversity Information Disclosure (Insurance Companies and Insurance Holding Companies) Regulations, published in the Canada Gazette Part I, Vol. 159, No. 7 (February 15, 2025) (collectively, the “Proposed Diversity Regulations ”).↩
2. The First Nations, the Inuit, and the Métis are each considered to be a group referred to in the definition of designated groups, and information for each group must be reported separately; see subsection 4(2) of the Proposed Diversity Regulations which outlines the separate reporting requirement.↩