Diversity disclosure for trust and loan companies

Summary#

The federal government has published proposed Diversity Information Disclosure (Trust and Loan Companies) Regulations that would require certain trust and loan companies to report on board and senior-management diversity. This is a proposal (not law yet) and comments are open for 30 days from the Canada Gazette publication on February 15, 2025 (so by March 17, 2025).

What it does#

• Applies to distributing trust and loan companies as defined under the Trust and Loan Companies Act.
• Requires directors to make diversity information available at the same time as the annual meeting notice.
• Companies would need to say whether they have:
  • term limits or other board renewal mechanisms and describe them (or explain why they do not);
  • a written policy for identifying and nominating candidates from the designated groups and, if yes, a short summary of the policy, how it is implemented, progress made, and whether its effectiveness is measured;
  • whether the level of representation of each designated group is considered when nominating directors and appointing senior management, and how (or why not);
  • targets for representation on the board and among senior management for each designated group, and annual and cumulative progress toward those targets (or reasons for not having targets).
• Requires reporting the number and percentage of people from each designated group on the board and in senior management, including for any major subsidiaries (a subsidiary that represents 30% or more of consolidated assets or revenue).
• Uses the Employment Equity Act definition of designated groups: women, Indigenous peoples (reported separately for First Nations, Inuit, and Métis), persons with disabilities, and members of visible minorities.
• Defines “members of senior management” to include roles such as the chair, vice-chair, president, chief executive officer, chief financial officer, vice-presidents in charge of major units, and officers who report directly to the board or chief executives.
• The required disclosure format includes a table (a schedule in the proposed regulations) for numbers and percentages.

Who's affected#

• Distributing federally regulated financial institutions (FRFIs) — roughly 16 institutions are expected to be directly affected.
• Boards of directors and senior managers at those institutions, who will be the subject of the reporting.
• Shareholders and investors who use proxy or annual-meeting materials to assess governance and diversity.
• The Office of the Superintendent of Financial Institutions (OSFI), which would oversee enforcement.
• Indigenous organizations and communities, since the rules require separate reporting for First Nations, Inuit, and Métis.
• Companies with large subsidiaries that meet the 30% test, because subsidiary figures must be included.

Why it matters#

• It would give investors clearer, more consistent information about who sits on boards and in senior management at major trust and loan companies. That can make it easier for shareholders to compare institutions and to ask questions about diversity and inclusion.
• The government estimates the direct compliance cost is small: a present-value cost of $56,905 from 2025 to 2034 (discounted at 7%), or about $8,102 per year. Those figures assume initial reporting work of 8 hours from a senior manager and 16 hours from a finance professional, then 2 hours and 4 hours annually thereafter.
• The rules mirror earlier diversity disclosure rules for other federally incorporated companies and provincial securities regimes. That alignment could make reporting simpler for institutions already subject to similar requirements.
• The proposal requires separate reporting for First Nations, Inuit, and Métis, which responds to requests for disaggregated Indigenous data. At the same time, the government notes practical issues: self-identification can raise privacy concerns and risks of inaccurate reporting.
• These are proposed regulations. They only become active after the related amendments in the Budget Implementation Act, 2024, No. 1 come into force and after final regulations are registered. The exact coming-into-force date is therefore not fixed in this notice.