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Approved by the Board September 24, 2019


A. Purpose

To ensure a shared understanding of the CIRA Board of Directors’ governance role.

B. Responsibility of the Board

i.             The Board. The Board of Directors (the “Board”) is responsible for the overall governance of CIRA’s affairs, which responsibility can be described by three distinct elements:

(a) the Board, collectively, having a duty to manage the business and affairs of CIRA, by overseeing, supervising and guiding CIRA’s chief executive officer (the “CEO”);

(b) each member of the Board (a “Director”) having a fiduciary duty to act in the best interests of CIRA; and

(c) each Director exercising a duty of care in discharging such responsibilities; that is, the care, diligence and skill that a reasonably prudent person would exercise in similar circumstances.

ii.            The Duty to Manage—Board Role and Management Role. While CIRA is incorporated under the Canada Not-for-Profit Corporations Act, standard corporate governance applies to the organization.  In fulfilling the duty to manage, the Board will most commonly act indirectly through supervision, oversight and guidance provided to the CEO and the senior leadership team through the CEO.  As discussed below (see Section C(ii)), this duty is fulfilled by the Board as a whole through one voice.

Under this duty, the Board is ultimately responsible (either through the senior leadership team or itself) for the management of the business and affairs of CIRA.  Another way to view this is that the Board is the steward of CIRA and its resources, and has accountability and responsibility for all of them by ensuring they are properly managed through its direction and oversight.

The Board will often perform this duty directly, but the Board must take care that its role does not cross over into performing management duties for which the CEO is responsible (and accountable to the Board). For clarity, the Board will often properly exercise its management duties by allowing the CEO to exercise management duties, but will step in when necessary to provide appropriate guidance, oversight or direction.  This delegation does not absolve the duty to manage, but is critical to appropriately discharging it — thus, the exercise of discretion is required, and several factors (the following list is not exclusive) may be considered by a Director when determining whether or not to step in:

(a) whether the decision is one that requires adoption, amendment, or repeal of CIRA’s by-laws;

(b) the size of the decision’s impact on CIRA, CIRA’s members or its stakeholders;

(c) the impact of the decision on CIRA’s financial position;

(d) the relevance of the decision to the direction, strategy, vision or mission of CIRA;

(e) the relevance of the decision on the reputation, legal liability or community benefit of CIRA;

(f) whether the decision involves a conflict of interest; or

(g) whether the decision could result in material regulatory, legislative, or media impact on CIRA.

iii.           The Fiduciary Duty—Best Interests of CIRA. Each Director is independent, owing a fiduciary duty to CIRA also known as the Director’s duty of loyalty. This duty means that each Director must, at all times, act honestly and in good faith with a view to the best interests of CIRA, setting aside his or her own interests.  CIRA has adopted a Director’s Code of Conduct and Conflict of Interest and Financial Associations Policy; located here.

But the duty goes beyond conflicts between a Director and CIRA, because the fiduciary duty is owed to CIRA and not to any other person (bearing in mind that CIRA is its own legal person, entitled to rights and obligated to perform under applicable law, with the Directors as its stewards).  Quite often, the interests of CIRA stakeholders, such as its members, are co-extensive with that of CIRA, but conflicting stakeholder interests will sometimes arise, or CIRA’s own interests may not align with some or all of its stakeholders.  In those situations, Directors may consider the reasonable expectations of all affected stakeholders (including CIRA members and employees as well as external stakeholders such as government, the public, and CIRA’s customers and partners) in determining what is in the best interests of CIRA, acting as a good and responsible corporate citizen.  Thus, Directors may regard all relevant considerations, including the need to treat affected stakeholders in a fair manner, but must always act in the best interests of the corporation.

iv.           The Duty of Care. Directors owe a duty of care to CIRA, and must serve CIRA selflessly, honestly and loyally.  This means that each Director must:

(a) be prepared for and attend meetings, ask questions, test assumptions, and articulate their views but stand behind Board decisions;

(b) be sufficiently familiar with CIRA’s business to determine whether it is being properly managed, including whether they must seek further training or advice from trustworthy experts; and

(c) ensure that they have the information needed to make informed decisions.

The Board may establish and maintain a process through which the Board, or any committee or Director on the Board, may engage independent counsel or other advisors to provide advice with respect to liabilities or their standard of care.  CIRA also makes training available to its Directors. 

While every Director owes the same duty of care, each Director may rely on the guidance of other Directors and professional advisors to CIRA who have specific domain expertise (and guidance and reports from management), and each Director who has specific domain expertise must apply it in satisfying that duty (and in scrutinizing such guidance and reports).

C. Internal and External Board Communications

i.             Board Decision-Making.  The Board and individual Directors may be guided by functions, programs, or projects of committees of the Board, but decisions are ultimately made through deliberation and Board votes conducted in accordance with CIRA’s by-laws.  When votes are called for, Directors must cast their vote independently and without conflict of interest, and may vote for or against the motion or may abstain from the vote.  If a Director abstains, that Director must clearly articulate to the Board, or at least to the Chair of the Board, the reason for the abstention (such as a conflict of interest).  Abstentions should not be used as a “polite objection”; objections should be noted for the record by a clear vote against a motion, with abstentions reserved for situations where a Director cannot or should not cast a vote.

ii.            After Board Decisions—Board Holism.  The authority of the Board to manage CIRA is held and used as a body, and not through individual Directors.  This concept is known as “board holism”, meaning that the Board must speak as a singular voice, reflecting the will of the Board as a whole.  This means that Directors must not give conflicting or multiple directions, and must instead speak for and as the Board once it has gone through its decision-making process.  However, this principle of board holism does not mean that Directors must stifle dissent; in fact, Directors are encouraged to express a diversity of perspectives when the Board is deliberating, voting and generally making decisions.

iii.           Proactive Board Communications.  Internal Board communications should be direct, open, frank and proactive.  When a director or the management team raises issues to the Board, particularly in writing, it opens a communication loop that must, at some point, be documented as closed.  Those participating in these communications must ensure that, in due course, the issues are resolved or addressed, in order to ensure issues are concluded and to dissuade any impression that important issues were not considered. The Board must maintain vigilance on communications between the Board, management and professional advisors, and Directors should take care to prevent communications, and again particularly written communications, from containing:

(a) exaggeration or overstatement;

(b) expressions of opinion as fact or without preface or qualification as an opinion;

(c) discussion of non-economic issues (e.g., safety and environmental issues) in financial terms;

(d) expressions placing blame;

(e) conclusory phrases (in the negative, such as “defective”, “negligent”, “reckless”, “fault”, “unsafe”, “misrepresentation”, “malicious”, “unreasonable”, etc.) when discussing corporate conduct; or

(f) statements that purport to speak on behalf of the Board or the organization without Board approval, to ensure objectivity and hindsight.

iv.           Board Advisors.  CIRA engages Board Advisors to provide input from key stakeholders, including government, who may attend (but not vote at) Board meetings.  Board Advisors shall have the right to attend meetings of the Board and all committees, provide input, express views and participate in all discussions of the Board, as described in the Bylaws.  Attendance of Board Advisors shall not be required for purposes of taking any action at Board meetings or for determining the existence of a quorum, but they have the right to receive notice of all Board and committee meetings.

D. Specific Roles

i.             Approving Strategic Objectives and Directions.  The Board engages constructively with the CEO in formulating the mission, vision, values and objectives for CIRA, and ensures that CIRA develops a strategic plan (the “Strategic Plan”) that will achieve the vision and objectives in a manner consistent with the mission and corporate values, CIRA’s sources of competitive advantage and important stakeholder needs.  Through this process, the Board facilitates CIRA’s articulation of key metrics to measure the success and pace of implementation of the Strategic Plan, and receives regular reports on progress.  The Board oversees annual plans, meetings, budgets, operations and major policy decisions for consistency with the Strategic Plan, and ensures that its decisions are also aligned with the plan and CIRA’s mission, mandate and values.  The Board annually reviews the Strategic Plan to determine if changes are required or whether the execution strategies should be modified.

ii.            Overseeing Financial Condition and Resources.  The Board sets into place strategies to ensure opportunities for revenues needed to sustain CIRA in delivering on its mandate and any community benefit expectations.  Ultimately, like other resources, the Board is responsible for the stewardship of CIRA’s financial resources including overseeing their allocation.  The Board approves the annual operating and capital budgets, and ensures that CIRA meets all financial reporting and disclosure obligations imposed on CIRA by applicable laws, regulations, rules, policies and other requirements relating to financial reporting and disclosure promulgated by governments and regulatory agencies.  The Board requires objective audits and reviews by independent accountants to ensure the accuracy of CIRA’s financial statements and the integrity of the system of internal controls. The Board approves investment policies and monitors compliance.

iii.           Overseeing Enterprise Risk Management.  The Board is responsible for being knowledgeable about the risks inherent in CIRA’s operation and seeks reasonable assurances that significant risks confronting CIRA are identified, monitored and managed.  The Board must be advised in a timely manner of new significant risks which confront CIRA and of the effectiveness of mitigation strategies.

iv.           Overseeing Performance Management.  CIRA must be able to measure and report the quality and performance of program and service delivery, and the cost-effectiveness of programs and services, and so the Board monitors progress in setting and achieving performance targets, and requires management to take corrective action when needed.  Because compensation and performance management are so closely tied, as set out under section (v)(b) below, the Board must obtain and maintain reasonable assurances that:

(a) CIRA’s overall compensation philosophy for all senior management balances the objectives of (i) attracting and retaining highly competent employees, (ii) appropriately and fairly rewarding strong performance by employees, (iii) maintaining CIRA’s employee costs at competitive levels, and (iv) linking compensation to the achievement of CIRA’s strategic objectives; and

(b) the compensation program for members of senior management as a group consists of an appropriate combination of base salary, performance-based rewards and other benefits, because the compensation of senior management is linked to CIRA’s performance.

v.            Overseeing Leadership.  The Board is responsible for hiring and discharging the CEO, and also for overseeing the CEO’s performance, including:

(a) establishing and maintaining a job description for the CEO;

(b) establishing and approving the terms and conditions of the CEO’s employment by CIRA, including the salary and other elements of compensation;

(c) participating in the onboarding of a new CEO to help ensure his or her success;

(d) reviewing and approving annual performance goals plan for the CEO, and evaluating performance including his or her supervision of the senior management staff;

(e) actively supporting the continued success and development of the CEO;

(f) establishing and communicating to the CEO a policy which defines the limits of the CEO’s powers, authority and accountability to the Board in managing the business and affairs of CIRA, including spending and debt limits;

(g) reviewing the decisions of the CEO regarding the discharge and terms of severance for any designated senior manager of CIRA;

(h) providing the CEO with information concerning the Board’s views on the performance of those staff members designated to support the activities of the Board;

(i) establishing CEO compensation and engaging the services of an independent compensation consultant to assess the appropriateness of CIRA’s executive compensation; and

(j) ensuring succession planning is in place for the CEO and senior management.

The Board must also obtain and maintain reasonable assurance as to the integrity of the CEO and the other members of senior management, and ensure that the CEO and the other members of senior management create and maintain a culture of integrity throughout CIRA.  To do so, as a part of regularly scheduled Board meetings, the Board must hold separate meetings of the Directors at which only the CEO, and no other members of management, is present (partially in-camera sessions), and also separate meetings at which no member of management is present (fully in-camera sessions).

vi.           Overseeing Stakeholder Relationships.  The Board understands the interests of key stakeholders and CIRA’s accountability towards them, not only through Board Advisors but more generally.  CIRA’s stakeholders include its members, but also its employees, suppliers, creditors, consumers, registrars and clients, governments and the public. The Board ensures that, in order to maintain its accountability, CIRA appropriately communicates with stakeholders, and the Board helps maintain healthy stakeholder relationships.  The Board ensures that CIRA periodically seeks the views of stakeholders on its performance and areas for improvement.

vii.          Managing the Board’s Own Governance.  The Board is responsible for the quality of its own governance and actively pursues opportunities for its improvement.  The Board must ensure the recruitment and replenishment of a skilled, experienced and qualified Board able to discharge its duties.  The Board establishes governance structures and processes which promote its effectiveness and that of individual Directors. The Board must use reasonable efforts to provide to all Directors continuing education opportunities to maintain and enhance their skills and abilities, and to further their knowledge and understanding of the nature and operation of CIRA’s business and affairs.

Each Director is responsible for investing the time and energy necessary for their training, development and full participation in the governance of CIRA.  The Board must regularly assess the effectiveness of Board and committee operations, Board recruitment processes, Board composition and size, committee structures and terms of reference, and other governance processes and structures.