The Bank Act expressly addresses corporate governance principles within the banking sector in Part VI—Corporate Governance. This post focuses on section 157, as discussed in The 2024 Annotated Bank Act (Thomson Reuters, 2023), dissecting the key components that govern the composition, duties and powers of boards of Canadian banks.
Section 157 delineates the powers and responsibilities of the bank’s board of directors. It articulates the basic duty of directors in the management of affairs within the bank. The section outlines several tasks which directors are required to undertake, such as mandating the establishment of an audit committee, and reinforcing financial transparency and accountability through oversight by a conduct review committee. These are required, except when the bank is a wholly owned subsidiary of another federal Canadian financial institution.
Further, section 157 requires establishing and enforcing governance policies and procedures by the directors. It requires the creation of policies related to resolving conflicts of interest, risk mitigation when dealing with confidential information, disclosing information to customers, resolving complaints, and designating a committee for reviewing these procedures. These policies are the foundation of the institution’s corporate governance framework, aligning the bank’s operations with regulatory standards and best practices.
As the financial landscape evolves, section 157 remains an important section within the regulatory framework. By establishing clear guidelines for the board’s mandate, the section contributes to the resilience and stability of Canadian financial institutions. Recent amendments and updates reflect a commitment to adaptability, ensuring that the section addresses emerging challenges and aligns with global governance standards.
In conclusion, section 157 of Part VI—Corporate Governance of the Bank Act outlines the board’s basic duties and requirements, powers and responsibilities, all of which are essential to the stability and success of the Canadian banking sector.
For more commentary on this specific section, or on any other aspect of the Bank Act itself, be sure to check out The 2024 Annotated Bank Act (Thomson Reuters, 2023).