Glossary of Governance Terms

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This glossary has been provided for GPC members who may not be familiar with some of the acronyms, words and concepts commonly used in corporate secretariat and governance practice. If you have terms to add or suggestions to improve the glossary, please e-mail us at [email protected]


All acronyms in this list are defined in the Glossary of Governance Terms

AIF Annual Information Form
AMEX American Stock Exchange
ATS Alternative Trading System
BA Banker’s Acceptance
BAR Business Acquisition Report
CBCA Canada Business Corporations Act
CCA Canada Corporations Act
CCCA Canadian Corporate Counsel Association
CCGG Canadian Coalition for Good Governance
CDS Canadian Depository for Securities
CIPF Canadian Investor Protection Fund
CIRI Canadian Investor Relations Institute
CPA Canadian Payments Association
CSA Canadian Securities Administrators
CSR Corporate Social Responsibility
CIDREQ Centre Informatisé de Renseignements sur les Entreprises du Québec)
DJIA Dow Jones Industrial Average
GIC Guaranteed Investment Certificate
GMI Governancemetrics International
GCP Global Carbon Project
GRI Global Reporting Initiative
ICGN International Corporate Governance Network
ICSA Institute of Chartered Secretaries and Administrators
IFRS International Financial Reporting Standards
IIROC Investment Industry Regulatory Organization of Canada
IPO Initial Public Offering
ISO International Standards Organization
KPI Key Performance Indicator
KYC Know Your Client
LIBOR London Interbank Offer Rate
LBO Leveraged Buy Out
MFDA Mutual Fund Dealers Association
MI Multilateral Instrument (CSA)
MOU Memorandum of Understanding
NASD National Association of Securities Dealers (NASD)
NASDAQ National Association of Securities Dealers Automated Quotation System
NGO Non Governmental Organization
NI National Instrument (CSA)
NP National Policy (CSA)
NOBO Non objecting Beneficial Owner
NUANS Newly Upgraded Automated Name Search
OBO Objecting Beneficial Owner
OSFI Office of the Superintendent of Financial Institutions
PPP Public Private Partnership
PPSA Personal Property Security Act
ROI Return on investment
RS Market Regulation Services Inc.
SEC Securities and Exchange Commission (U.S.)
SEDAR System for Electronic Document Analysis and Retrieval
SOE Sate Owned Enterprise
SOX Sarbanes Oxley Act, aka ‘Public Company Accounting Reform and Investor Protection Act'
SRO Self-Regulatory Organization
TSX Toronto Stock Exchange


Acid Test Ratio
A key measure of a firm's liquidity, it answers the question "Can this firm meet its current obligations from its liquid assets if suddenly all sales stop?" More stringent than 'current ratio,' it excludes inventories (typically the least liquid of current assets) to concentrate on the more liquid assets of the firm. Usually an acid test ratio of 1.0 or higher is considered satisfactory by lenders and investors. Also called acid ratio or quick ratio. Formula: (Current assets - inventory value) ÷current liabilities.
The requirement of a person in a position of responsibility to justify, explain or account for the exercise of their authority and their performance and actions. Accountability is to the person who bestows the authority.
The postponement, suspension and interruption of an ongoing hearing or meeting to resume at some future date; to break off for later resumption. The Court may adjourn any session from time to time and meet again at the time appointed for the transaction of business." In parliamentary law and procedure, according to Horsley's Meetings – Procedure, Law and Practice, p. 84, the word is sometimes misused and is: "... acquiring a further, derived meaning of 'close, conclude or finish'…. When a meeting concludes its business and finishes, the customary term is 'closes' (not 'adjourns') even if some agenda items have not been dealt with and are left over until a later meeting." Contrast this statement with Robert's Rules of Order, 10th Edition (2000) which states: "To adjourn means to close the meeting”
Adverse Opinion 
An adverse opinion is given when there is a disagreement between the auditor and the corporation’s management, and the auditor believes that the financial statements are misleading or incomplete is a material way. An adverse opinion is quite uncommon.
A corporation that is related to another corporation by one owning shares of the other, by common ownership, or by other means of control. In general: two companies are affiliated when one owns less than a majority of the voting stock of the other, or when both are subsidiaries of a third company. A subsidiary is a company of which more than 50% of the voting shares are owned by another corporation, termed the parent company . A subsidiary is always, by definition, an affiliate, but subsidiary is the preferred term when majority control exists. In everyday use, affiliate is the correct word for intercompany relationships, however indirect, where the parent-subsidiary relationship does not apply.
Alternative Trading System (ATS)
Automated matching system that brings together orders from buyers and sellers using predetermined, established methods or rules under which the orders interact.

The combination of one or more companies into a new entity. An amalgamation is distinct from a merger because neither of the combining companies survives as a legal entity. Rather, a completely new entity is formed to house the combined assets and liabilities of both companies.

For example, Ontario's Business Corporations Act, at section 174, provides that "2 or more corporations ... may amalgamate and continue as one corporation" (RSO 1990 Chapter B16)., amalgamation takes effect only on the delivery or filing of articles of amalgamation or some similar requirements which constitutes the amalgamating corporations as one continuing corporation.
Unlike a merger, which takes place without any action on the part of any legislative authority.

This sense of the term amalgamation has generally fallen out of popular use and the terms "merger" or "consolidation" are often used instead. Although companies may be merged or acquired using a variety of different techniques, the net effect is substantially the same from a lay perspective.

American Stock Exchange (AMEX)
Stock exchange with the second biggest volume of trading in the United States where most of the stocks and bonds traded are those of small to medium-size companies; AMEX also trades in option and some over-the-counter stocks, with more foreign shares traded than on any other U.S. exchange.
Gradually writing-off the value of an intangible asset over a period of time. Commonly applied to items such as goodwill, improvements to leased premises, or expenses of a new stock or bond issue.
Annual bonus plan

Annual bonus plan is an arrangement providing a bonus for service over a period not exceeding one year.

Annual Information Form (AIF)
A company that is not a venture issuer must file an AIF every year, usually 90 days after the end of the company's most recent financial year. An AIF provides material information about a company and its business in the context of its historical and possible future development. It describes the company and its operations, prospects, risks and other factors that impact its business. For further information, see Part 6 of National Instrument 51-102 Continuous Disclosure Obligations and Form 51-102F2.
Annual Return
A document (commonly called Form 22) that includes information about a corporation that must be filed within 60 days of the corporation's anniversary date. This form should not be confused with annual financial statements or annual reports.
Arm’s Length
The term "at arm's length" describes a relationship where persons act independently of each other or who are not related. The term "not at arm's length" means persons acting in concert without separate interests or who are related.
Articles of Incorporation:
A legal document with clauses that govern an incorporated business. To incorporate under the CBCA, a person must correctly complete the Articles of Incorporation and the Initial Registered Office Address and First Board of Directors form and must file the forms with Corporations Canada. The Articles of Incorporation, when filed, create the corporation and set out important matters such as the number of directors and types of shares the corporation will have.
Asset Backed Commercial Paper
Unsecured short-term promissory notes usually issued by corporations which is securitized with loans or other receivables held in a special purpose vehicle.
Asset-Liability Risk
Risk to a firm from having assets and liabilities whose risk exposures do not offset one another.
At-The-Money Option  
An option with an exercise or strike price that is equal, or almost equal, to the current market price of the underlying security.

Attorney for Service According to provincial laws, corporations and LLCs located out of province must have an attorney for service, also known in the US as a ‘registered agent’ or ‘statutory agent’. This Agent must be named in the articles of incorporation and be located in the province of incorporation or organization in order to receive all legal notifications. The attorney for service will receive important legal and tax documents, such as franchise tax forms and annual report forms.
Audit Report
Report for shareholders produced by the external auditor on completion of the annual audit, and included in the corporation’s published annual report.
Authorized Capital
The maximum number of shares a corporation is permitted to issue as set out in its articles. Authorized capital may consist of different classes of shares. The CBCA permits only shares without par value.


Balanced Scorecard Evaluation
Balanced scorecard evaluation is multiple perspective performance evaluation first advocated by authors Robert Kaplan and David Norton to balance measures of a financial perspective with those of non-financial perspectives. The non-financial measures typically include measures of improvement in customer relations, learning and growth, and internal operating processes. It is commonly used as the performance measures for long-term incentive plans. See “long-term incentive plans.”
Bankers’ Acceptance (BA)
Short-term negotiable (transferable) debt instrument issued by a non-financial company but with principal and interest guaranteed by a bank, issued at a discount with a fixed term, usually 30 to 60 days.
Basis Point
A phrase used to describe differences in bond yields, with one basis point representing one-hundredth of a percentage point. Thus, if bond X yields 11.50% and bond Y yields 11.75%, the difference is 25 basis points.
Bearer Security
Certificate not registered in the name of any investor, where the holder is considered the owner of the security.
Beneficial Owner
The real owner of a security. An investor may have securities registered in the name of a broker, trustee or bank to facilitate transfer or to preserve anonymity, but the investor is the beneficial owner and will receive any dividends, interest or profits from sales.
Black-Scholes Option Pricing Formula
A pricing formula for determining the value of an option.
A bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest (the coupon) to use and/or to repay the principal at a later date, termed maturity. A bond is a formal contract to repay borrowed money with interest at fixed intervals (ex semi annual, annual, sometimes monthly). Thus a bond is like a loan: the holder of the bond is the lender (creditor), the issuer of the bond is the borrower (debtor), and the coupon is the interest.
Business Acquisition Reports (BAR)
A company must file a BAR after completing a significant acquisition. The BAR describes the significant business(es) acquired and the effect of the acquisition on the company. The BAR must be filed within 75 days after the date of acquisition. For further information see Part 8 of National Instrument 51-102 Continuous Disclosure Obligations and Form 51-102F4.
Business Judgment Rule
The Canadian courts have acknowledged that a certain amount of risk taking is inherent on operating and overseeing a business. Therefore the courts apply a ‘business judgment rule’ in assessing how officers and directors have made decisions. The court will not interfere lightly with or second guess directors’ decisions, even if the results were not perfect, as long as such decisions were made on a reasonable basis (directors exercising their duty of care), in good faith, and without a conflict of interest.
Bylaws (also ‘by-laws’)
Bylaws are the written rules for conduct of a corporation, association, partnership or any organization. They should not be confused with the Articles of Corporation which only state the basic outline of the company, including stock structure. Bylaws generally provide for meetings, elections of a board of directors and officers, filling vacancies, notices, types and duties of officers, committees, assessments and other routine conduct. Bylaws are, in effect a contract among members, and must be formally adopted and/or amended by the members or shareholders.


An option to purchase an asset
Canada Business Corporations Act (CBCA)
The Canada Business Corporations Act is the statute that governs federally incorporated business, not including banks, insurance and trust and loans companies.
Canada Corporations Act (CCA)
The predecessor act to the Canada Business Corporations Act. All corporations originally incorporated under the CCS were required to be continued under the CBCA by December 15, 1980. The CCA still applies to Canadian corporations without share capital and to not-for-profits. But these corporations must be continued under the new Not for Profit Corporations Act which came into force in 2010.
Canadian Coalition for Good Governance (CCGG)
The CCGG was formed to promote good governance practices in the companies owned by its members. Generally, these companies are members of the S&P/TSX Composite Index. Coalition members believe that good governance practices contribute to a company's ability to create value for its shareholders. Membership in the CCGG includes a wide range of institutional investors: pension funds, mutual funds and third party money managers. Currently, there are 48 members who manage nearly $2 trillion in assets on behalf of Canadian investors. {}
Canadian Corporate Counsel Association (CCCA)
The Canadian Corporate Counsel Association (CCCA) is the national voice and forum for in-house counsel in Canada. The members are lawyers engaged in practice in corporations, business enterprises, associations, institutions, not-for-profit organizations, government and regulatory boards and agencies, Crown corporations, and regional or municipal corporations {}
(The) Canadian Depository for Securities Limited (CDS)
National clearing house and depository for securities; provides a variety of automated services for financial institutions active in Canada and international capital markets.
Canadian Investor Relations Institute (CIRI)
The Canadian Investor Relations Institute (CIRI) is a professional, not-for-profit association of executives responsible for communication between public corporations, investors and the financial community.

With four Chapters and 600 members across Canada, CIRI is the world’s second largest society of investor relations professionals. {}

Canadian Payments Association (CPA)
Association created by an Act of Parliament in 1980 whose mandate was amended through the Canadian Payments Act in 2001 to establish and operate national systems for the clearing and settlement of payments and other arrangements for the making or exchange of payments; facilitate the interaction of the CPA’s systems with others involved in the exchange, clearing and settlement of payments; and facilitate the development of new payment methods and technologies.
Capital Adequacy
A condition where a financial institution or trading organization has sufficient capital for the risks it is taking.
Capital Requirements
A financial institution's or trading organization's requirements to hold capital for the specific risks it takes.
Casting Vote
An extra vote given by a chairperson to decide an issue when the votes on each side are equal
Canadian Investor Protection Fund (CIPF)
The CIPF was established by the investment industry to protect investors. It is CIPF’s mandate to ensure, within defined limits, that the cash and securities belonging to eligible customers of Canadian investment dealers are returned to them in the event of the insolvency of a CIPF Member. CIPF is sponsored by the Investment Industry Regulatory Organization of Canada (IIROC) and is the only compensation fund approved by the CSA for IIROC Dealer Members. All IIROC Dealer Members are CIPF Members. For more information visit {}
Capital Gains or Losses
Gains or losses realized from the sale or exchange of capital assets. The amount is determined by calculating the difference between an asset's purchase and sale price.
Capital Market
This market brings together all the providers and users of capital, all the financial products, like stocks and bonds which make the transfer of capital possible, and all the people and organizations which support the process.
Total dollar amount of all money invested in a company, such as debt, preferred and common shares, contributed surplus and retained earnings of a company. It can also be expressed as a percentage.
Capital Structure (see Capitalization)
Cash Flow
A company's net income for a stated period plus any deductions that are not paid out in actual cash, such as depreciation, amortization, deferred income taxes and minority interest. Cash flow can provide a broader picture of a company's earning power than net earnings alone. Cash flow is important to investors as it shows the company's ability to pay dividends and finance expansion.
Certificate of good standing
A document issued by an incorporating authority (federal, provincial, or territorial government) stating that the organization is duly incorporated and that it is in good standing with the authority. The name of the document may vary from jurisdiction to jurisdiction.
A chaeol is a business conglomerate structure that originated in South Korea in the 1960s, creating global multinationals with huge international operations. The word "chaebol" means "business family" or "monopoly" in Korean. The chaebol structure can encompass a single large company or several groups of companies. Each chaebol is owned, controlled or managed by the same family dynasty, generally that of the group's founder. Samsung, Hyundai and LG Group are among the biggest and most prominent chaebol.
Charitable organization
Under Canadian law a charitable organization has the following characteristics: 1) is established as a corporation, a trust, or under a constitution; 2)has exclusively charitable purposes; 3)primarily carries on its own charitable activities, but may also gift funds to other qualified donees, (e.g., registered charities); 4) more than 50% of its governing officials must be at arm's length with each other; 5) generally receives its funding from a variety of arm's length donors; and 6) its income cannot be used for the personal benefit of any of its members, shareholders, or governing officials.
(Centre Informatisé de Renseignements sur les Enteprises du Québec) – the Quebec based Quebec Enterprise Register Computer Centre. This database contains entries for businesses, sole proprietorships, partnerships and corporations. It provides information relating to:
  • Corporate profiles and name of home jurisdiction
  • Names and addresses of directors
  • Shareholder information (3 main shareholders)
  • NEQ (Quebec business number)
  • Names used in Quebec
  • Elected Domicile (mailing address)
  • Business establishments
  • Documents filed at the Quebec registry
Closed End Fund
Mutual fund with a fixed number of outstanding shares, which trade on a stock exchange.
Assets held to secure an obligation.
Comfort Letter (see ‘Letter of Comfort’)
Commercial Paper
Short-term negotiable debt securities issued by non-financial corporations with terms of a few days to a year.
Products used for commerce that are traded on a separate, authorized exchange, such as the Winnipeg Commodities Exchange or the Chicago Board of Trade. Commodities include agricultural products and natural resources such as timber, oil and metals, and are the basis for futures contracts traded on these exchanges.
Compensation means all forms of cash and non-cash payments or benefits provided in exchange for services, including salary and wages, bonuses, severance payments, deferred payments, retirement benefits, fringe benefits, and other financial arrangements or transactions such as personal vehicles, meals, housing, personal and family educational benefits, below-market loans, payment of personal or family travel, entertainment, and personal use of the organization’s property.
Compound Interest
Interest earned on an investment at periodic intervals and added to the original amount of the investment. Future interest payments are then calculated and paid at the original rate but on the increased total of the investment. This is really interest paid on interest.
Consolidated Financial Statements
A combination of the financial statements of a parent company and its subsidiaries, presenting the financial position of the group as a whole.
Constrained Share Corporation
Canadian banks, trust, insurance, broadcasting and communication companies have limits on the number of shares or percentage of shares owned by people who are not Canadian citizens or residents. Foreign ownership is restricted since these companies or institutions are either culturally important or fundamentally important to the Canadian economy. As well, CBCA Section 174 permits corporations to decide by special resolution to amend its articles to constrain the issue of shares to non-residents. A constrained share corporation must disclose its status on its share certificates as well as other disclosure materials.
Consumer Price Index (CPI)
A major inflation measure computed by Statistics Canada. It measures the change in prices of a fixed basket of a variety of goods and services in the previous month. This basket of goods is supposed to reflect the average needs of a Canadian family.
Continuous Disclosure
A securities issuer must issue a press release as soon as a material change occurs in its affairs and within ten days for any other changes in the company.
Contributed Surplus
Part of shareholders’ equity which originates from sources other than earnings, such as the initial sale of shares above par value.
Convertible Security
A bond, debenture or preferred share which may be exchanged by the owner, usually for the common stock of the same company. Convertibles are attractive to investors as they provide the security and income of a bond, debenture or preferred share, as well as the opportunity to participate in the growth of the company through converting to common shares.
A cooperative is a private business organization that is owned and controlled by the people who use its products, supplies or services. Although cooperatives vary in type and membership size, all were formed to meet the specific objectives of members, and are structured to adapt to member's changing needs. Cooperatives are formed by individuals who coordinate among themselves (horizontal coordination) to achieve vertical integration in their business activities.
Corporate Opportunity Doctrine
Legal principle that the members of the board of directors, executives, and other employees of a firm owe it a fiduciary duty, and may not use the information acquired in their official capacity for personal gain.
Corporate Social Responsibility
Responsibility shown by an organization for matters of general concern to the society in which it operates, such as protection of the environment, health and safety of workers and social welfare.
Corporate Sustainability
Aligns an organisation's products and services with stakeholder expectations, thereby adding economic, environmental and social value (Price WaterhouseCoopers).
A mini-certificate actually attached to a bond certificate which represents an actual interest payment. The coupon becomes negotiable on the date the interest is due and usually represents the six month interest payment on the face value of the bond certificate. The term "coupon" is sometimes used as a slang reference to the interest rate paid on a debt instrument, i.e. the coupon of the new Government of Canada March 2015 is 8.75%. This means the interest rate is 8.75% per annum on the face value of the bond.
A creditor is a party to whom money is owed. Common classifications of a creditor include: 1) Secured creditor who has a legal right to take a specific property of the borrower and sell it in case of default; 2) unsecured creditor, who does not have any right over a particular property; 3) Preferential creditor who is given preference usually by a statutory right who takes precedence over other creditors in laying claim to a bankrupt borrower’s property, such as unpaid employees.
Credit Rating
Ratings given to corporations and other debt issuers by agencies such as Standard & Poor’s and Moody’s, that give an assessment of the credit risk of the issuer – i.e. the risk of default by the issuer.
Credit Risk
Risk due to uncertainty in a counterparty's ability to meet its obligations.
Current Assets
Cash and assets such as accounts receivable and inventories, which in the normal course of business can be converted into cash within a year. Current assets are found on the company's balance sheet.
Current Liabilities
Money owed to the company and due to be paid within a year, such as accounts payable. Current liabilities are found on the company's balance sheet.
Current Ratio or Working Capital Ratio
Current assets of a business divided by current liabilities, thus measuring how much the value of current assets exceeds its liabilities. This is one of the tests to determine how much cash a company has on hand to cover its current liabilities.
Current Return or Yield
The annual income from an investment expressed as a percentage of the investment's current value. On stock, this is calculated by dividing yearly dividends by the market price of the security. On bonds, this is calculated by dividing yearly interest by current price. For example, if the income is $50 a year on an investment with a value of $1,000, the current yield is 5%.


Debenture is a generic term which includes bonds and other for of instruments evidencing the debt of a corporation. In a narrower sense, debenture usually describes an unsecured promise to pay , or perhaps an obligation secured by a general charge on the corporation’s assets but without mortgaging a specific property.

Defined benefit plan
Defined benefit plan is any retirement or other deferred compensation arrangement that is not a defined contribution plan. More practically, it is a plan which defines the benefit, occasionally a fixed dollar amount or more frequently an amount based upon an employee’s compensation or a combination of compensation and years of service, and for which the employer bears the investment risk.

Defined contribution plan
Defined contribution plan is a retirement or other deferred compensation arrangement that provides for (i) an individual account for each participant and (ii) benefits based solely on the amount contributed to the participant's account, and any income, expenses, gains and losses, and any forfeitures of accounts of other participants which may be allocated to such participant's account. More practically, it is a plan for which the employee or participant bears the investment risk.

An amount deducted from an asset's book value to account for loss in value over time.

A derivative instrument (or simply derivative) is a financial instrument which derives its value from the value of some other financial instrument or variable. For example, a stock option is a derivative because it derives its value from the value of a stock.

Derivative Action
The powerful but infrequently-used remedy of “derivative action’ permits a shareholder or other “complainant” to advance an action on behalf of the corporation when the corporation refuses to bring the action itself. The action is available to rectify wrongs done to the corporation itself rather than to the individual shareholder. The intent of the remedy is to circumvent the problem of management not taking action to rectify a wrong where they may have been involved in or responsible for the wrong sustained by the corporation. Standing to begin a derivative action is given to a “complainant”, a defined term under the OBCA. Section 245 of the OBCA defines a “complainant” as: (a) a registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a corporation or any of its affiliates; (b) a director or an officer or a former director or officer of a corporation or of any of its affiliates; (c) any other person who, in the discretion of the court, is a proper person to make an application. A person with standing may seek leave to do one of two things: to “bring an action in the name and on behalf of a corporation or any of its subsidiaries”, or to “intervene in an action to which any such body corporate is a party” in order to prosecute, defend or discontinue the action on behalf of the body corporate. The four statutory pre-conditions necessary to bring a statutory derivative action may be summarized as follows: (a) the directors of the corporation or its subsidiary will not bring, diligently prosecute or defend or discontinue the action; (b) the complainant has given reasonable notice to the directors of the corporation or its subsidiary of his or her intention to seek leave to commence a derivative action; (c) the complainant is acting in good faith; and (d) it appears to be in the interests of the corporation or its subsidiary that the action be brought, prosecuted, defended or discontinued.

An individual elected by the shareholder(s) to supervise the management of a corporation. Together, all directors of a corporation are referred to as the "board of directors". All federal corporations are required to have one or more directors, a majority of whom must be resident Canadians.

Disbursement Quota
The Disbursement Quota is the minimum amount of money that a registered charity must spend either on charitable programs or as gifts to qualified donees (usually other registered charities) in order to keep its charitable status. The reason behind the quota is to protect the public by making sure that most of a registered charity‘s funds are used to further its charitable purposes and activities. It also encourages charities not to accumulate too much money and to keep their other expenses at a reasonable level. To help charities plan their spending, the Disbursement Quota is largely based on what happened in previous years. This means that at the end of the year, a registered charity should have a fairly clear idea of how much it will need to spend on its charitable programs the following year. The CRA provides a calculation of a charity‘s Disbursement Quota figure based on the information provided by the charity in its annual Information Return. This figure will then be indicated on the charity‘s Registered Charity Information Return Summary.

Disclaimer of Opinion
A disclaimer of opinion is a refusal by the auditor to give an opinion on a particular item in the financial statements. A disclaimer would be appropriate where an auditor has been unable to find sufficient audit evidence to support an item.

Dissolution Is the termination of a corporation's legal existence. Dissolution may be caused many ways including, failure to file annual reports, failure to pay certain taxes, bankruptcy, or voluntary dissolution of the corporation by the shareholders and directors.

Distributing Corporation
A distributing corporation is a corporation that is a reporting issuer within the meaning of any applicable securities legislation, unless it is subject to an exemption from that legislation; OR is not a reporting issuer but has filed a prospectus or similar document in relation to the public distribution of its shares; has securities that are listed and posted for trading on a stock exchange in or outside Canada; is a distributing corporation that is involved in or results from a statutory procedure, such as an amalgamation or reorganization. The corporation is not subject to an exemption or an order under provincial securities legislation.

Dividend A dividend is a distribution of money or property paid by the corporation out of the corporation's profits to shareholders. The board of directors of the corporation decide if a dividend payment is to be made and it can only be made if the corporation has profits.

Doing Business As (DBA)
A "DBA”, also known as an "assumed name", is typically completed by making a filing at the provincial level where the business is located. This filing does not change the official name of the corporation; however, it allows the company to use additional names.

Dow Jones Industrial Average (DJIA)
An average made up of 30 blue chip stocks that trade daily on the New York Stock Exchange. The DJIA is used as an overall indicator of market performance although criticism is periodically raised over how it is calculated, as well as the fact that so few companies are included so that it may not be a truly representative indicator of market activity.

Duty of Care
Found in the CBCA at S. 122(1)(b) the duty of care requires directors and officers to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. The objective standard (reasonably prudent person in comparable circumstances) is the minimum standard, but directors with special expertise may be held to a higher standard.


Ethical Investment
See Socially Responsible Investment
Exchange Rate
Exchange Rate Price for which the currency of a country can be exchanged for another country's currency. Factors that influence exchange rate include (1) interest rates, (2) inflation rate, (3) trade balance, (4) political stability, (5) internal harmony, (6) high degree of transparency in the conduct of leaders and administrators, (7) general state of economy, and (8) quality of governance.
Ex Dividend (Without Dividends)
Feature of an equity that is the opposite of an equity cum dividend whereby the buyer is not entitled to the declared dividend or rights; the exchange sets an ex dividend date three days prior to the dividend or rights record date on and after which the stock is traded with the dividend entitlement retained by the seller.
Exercise price
Exercise price means with respect to any option, appreciation right, or other form of equity compensation, the price paid by the beneficiary receiving the benefit of the compensation. With respect to an option, it is typically the price stated in the arrangement or instrument evidencing the option price at which the option entitles beneficiary to purchase a share of stock or unit of a security upon exercise of the option. The exercise price may never be less than the fair market value of the underlying stock or other security and the number of shares or other units subject to the option must be fixed on the original date of grant of the option.
External Audit
The external audit gives users of a corporation’s financial statements some reassurance that the information in the statements is believable. The external audit is performed by a firm approved by the shareholders at the Annual General Meeting. While the external auditor has no responsibility for detecting fraud or error (this is the responsibility of management through implementing an adequate system of internal controls), the auditor will assess the risk or possibility that fraud or error may have caused the financial statements to ne materially misleading.


Fair Market Value
The value of an asset, under the assumption it is sold to a willing purchaser by a willing seller, under normal market conditions.
Fiduciary Duty
The obligation of directors and officers to act honestly and in good faith with a view to the best interests of the corporation. The essential elements of a fiduciary duty are trust, confidence, good faith, and conduct by the fiduciary which is above reproach and for the benefit of the other party. In the context of the corporation, this means that the director or officer must set aside their own self interest and be loyal to the interest of the corporation. The fiduciary duty is owed to the corporation.
Fiscal Year Any twelve-month period used by a business as its fiscal accounting period.
Flow-Through Shares
Tax deductions and credits, normally available only to a corporation, are given to the owners of the corporation's flow-through shares. Canadian exploration and mining companies are able to issue such shares at a premium because investors are considered to be funding exploration and development costs and are therefore entitled to deduct these expenses from all other income.
Forward-Looking Information
Companies are encouraged to provide forward-looking information in the disclosure they provide to the public if they have a reasonable basis for doing so. For example, the preparation of MD&A necessarily involves some degree of prediction or projection. The MD&A requires a discussion of known trends or uncertainties that are reasonably likely to affect your company's business. All forward-looking information must contain a statement that the information is forward-looking; a description of the factors that may cause actual results to differ materially from the forward-looking information; material assumptions; and appropriate risk disclosure and cautionary language. Detailed guidance can be found in Parts 4A and 4B of National Instrument 51-102 Continuous Disclosure Obligations.


Global Carbon Project
The Global Carbon Project (GCP) was established in 2001 with the objective to seek to quantify global carbon emissions and their causes. The main object of the group has been to fully understand the carbon cycle. The project has brought together emissions experts and economists to tackle the problem of rising concentrations of greenhouse gases. See
Global ReportingInitiative (GRI)
The Global Reporting Initiative (GRI) is a non-profit organization that promotes economic, environmental and social sustainability. GRI provides all companies and organizations with a comprehensive sustainability reporting framework that is widely used around the world.
Going Private Transaction
Going –private transactions are amalgamations, arrangements share consolidations or other forms of transactions that would cause the interest of a shareholder in the shares of a corporation to be terminated without the consent of the shareholder and without the substitution of an equivalent interest in a participating security. Corporate statutes set out the procedures to be followed for such a transaction, and are largely to protect the minority shareholder.
Goodwill is an intangible asset of a company. The buyer of a business is often willing to pay for the "good name" of the business in addition to the value of its assets. Goodwill appears on the balance sheet as the excess of the amount paid for the shares over their net asset value.
Governancemetrics International (GMI)
GMU is an independent research and ratings agency founded in 2001 to provide international investors with an objective way of assessing corporate governance risk. See
Guaranteed Investment Certificate (GIC)
Deposit instrument requiring a minimum investment at a pre-determined rate of interest for a stated term; most commonly available from banks and trust companies.


An indemnity is an agreement between two parties - the indemnifier who agrees to indemnify, hold harmless and reimburse the indemifee for any losses or damages suffered or incurred in a situation specified in the agreement.. In effect, the indemnifier agrees to pay any losses the other party endures in order to induce the indemnified party to do something.

Indoor Management Rule
Under the indoor management rule, an outsider to the corporation is entitled to assume that where the directors purport to exercise any power, the conditions for exercising that power have been complied with and the power has been exercised in the best interests of the corporation. The exception is where the person who relied on this rule had or ought to have had actual knowledge of the lack of corporate authority. Section 18 of the CBCA provides statutory codification of this common law rule.

Initial Public Offering
Also referred to as an ‘IPO’, an initial public offering is the first sale of shares by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises. Many companies that undertake an IPO also request the assistance of an Investment Banking firm acting in the capacity of an underwriter to help them correctly assess the value of their shares, that is, the share price, and provide advice respecting timing of the issue.

Directors, senior officers and any other people, such as lawyers and accountants, who can be presumed to have access to non-public information concerning a company. It also includes anyone owning more than 10% of the voting shares in a corporation.

Insider Report
A report of all transactions in the shares of a company made by those considered to be insiders of the company. It is submitted each month to the provincial securities commissions and allows the administrators to monitor trading by such people to ensure regulations are not violated.

Insider Trading
Trading in the shares of a corporation by an individual who has knowledge of otherwise undisclosed information that comes from a source inside the corporation. In most jurisdictions, insider trading is a criminal offence.

Institute of Chartered Secretaries and Administrators (ICSA)
ICSA is the international qualifying and Membership body for the Chartered Secretary profession and a recognised authority on governance and compliance. (

Interim Dividend
Distribution of profits to shareholders before a company’s annual earnings have been computed, or at any time between two successive annual general meetings. Interim dividend is generally paid quarterly in the US and Canada and semi-annually in the UK. Companies paying interim dividend try to be reasonably certain that they can afford it, and make the necessary adjustments (if any) in the subsequent or year-end payments.

Institutional Shareholder
An institutional shareholder is an organization with large amounts of funds to invest into corporate shares and debt. The main institutional shareholders in Canada and the US are pension funds, mutual funds and insurance companies, In Canada, the Canadian Coalition for Goof Governance ( represents the largest group of institutional shareholders.

Internal Audit
Investigations and checks carried out by the internal auditors of an organization. Internal audit is a function rather than an activity. However, the work program of an effective internal audit team may reduce the amount of work the external auditor needs to carry out in performing the annual audit , provided the external and internal auditors collaborate effectively.

Internal Controls
Control measures within an organization that are intended to ensure the safeguarding of the organization’s assets and to prevent or detect fraud or error.

International Corporate Governance Network
The ICGN is a global membership organisation of over 500 leaders in corporate governance based in 50 countries with a mission to raise standards of corporate governance worldwide. ICGN members are largely institutional investors who collectively represent funds under management of around US$18 trillion. See

International Financial Reporting Standards
International Financial Reporting Standards (IFRS) is a set of accounting standards developed by an independent, not-for-profit organization called the International Accounting Standards Board (IASB).

The goal of IFRS is to provide a global framework for how public companies prepare and disclose their financial statements. IFRS provides general guidance for the preparation of financial statements, rather than setting rules for industry-specific reporting.

Having an international standard is especially important for large companies that have subsidiaries in different countries. Adopting a single set of world-wide standards will simplify accounting procedures by allowing a company to use one reporting language throughout. A single standard will also provide investors and auditors with a cohesive view of finances.

Currently, over 100 countries permit or require IFRS for public companies, with more countries expected to transition to IFRS by 2015. Proponents of IFRS as an international standard maintain that the cost of implementing IFRS could be offset by the potential for compliance to improve credit ratings. IFRS is sometimes confused with IAS (International Accounting Standards), which are older standards that IFRS has replaced

International Standards Organisation (ISO )
ISO (International Organization for Standardization) is the world's largest developer and publisher of International Standards. ISO is a network of the national standards institutes of 162 countries, one member per country, with a Central Secretariat in Geneva, Switzerland, that coordinates the system. It developed the non-binding standard for CSR known as ISO26000.

Investment Industry Regulatory Organization of Canada (IIROC)
IIROC is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada. Created in 2008 through the consolidation of the Investment Dealers Association of Canada and Market Regulation Services Inc., IIROC sets high quality regulatory and investment industry standards, protects investors and strengthens market integrity while maintaining efficient and competitive capital markets. IIROC carries out its regulatory responsibilities through setting and enforcing rules regarding the proficiency, business and financial conduct of dealer firms and their registered employees and through setting and enforcing market integrity rules regarding trading activity on Canadian equity marketplaces.

Issuer Bid
An offer by an issuer to buy back some of its own securities. This is usually done because the company feels the market is undervaluing its securities.


Junk Bond
A bond whose credit rating is below BBB-


A keitsu is a group of closely related Japanese companies, often with interlocking ownership. Traditionally, there have been both horizontal and vertical keiretsu. Horizontal keiretsu center on a main bank and their companies span various industries. Vertical keiretsu center on a major manufacturer, like Toyota, and include its various suppliers and wholesalers. The keiretsu encourage its members to award contracts to sister companies and cooperate with each other for the overall good of the keiretsu. The keiretsu dominated the Japanese economy in the last half of the twentieth century, but are more recently weakening their grip on the business culture of Japan.
Key Performance Indicators (KPI)
Key business statistics such as number of new orders, return on investment (ROI) , employee turnover, which measure a company’s performance in critical areas. KPI’s show the progress (or lack) toward realizing the company’s objectives or strategic plans by monitoring activities which, if not properly performed, would likely cause severe losses or outright failure
Know Your Client (KYC)
Requirement of securities salespeople and securities firms to obtain certain facts about an investor, such as risk tolerance, to ensure that appropriate investment decisions are made on the investor/client's behalf. (Source: eClientscope)


Legal Person
Legal Person is the characteristic of a non-human entity regarded by law to have the status of personhood. A legal person has a legal name and has rights, protections, privileges, responsibilities, and liabilities under law; a natural person is distinct from an artificial person. Legal personality allows one or more natural persons to act as a single entity (a composite person) for legal purposes. In many jurisdictions, legal personality allows such composite to be considered under law separately from its individual members or shareholders. They may sue and be sued, enter contracts, incur debt, and own property. Entities with legal personality may also be subjected to certain legal obligations, such as the payment of taxes. An entity with legal personality may shield its shareholders from personal liability.
The concept of legal personality is not absolute. “Piercing the corporate veil” refers to looking at individual human agents involved in a corporate action or decision; this may result in a legal decision in which the rights or duties of a corporation are treated as the rights or liabilities of that corporation’s shareholders or directors. Generally, legal persons do not have all of the same rights—such as the right to freedom of speech—that natural persons have, although the United States has become an exception in this regard). Corporations are by definition legal persons. Municipal corporations (municipalities) are “creatures of statute.” Other organizations may be created by statute as legal persons, including European economic interest groupings (EEIGs). There are limitations to the legal recognition of legal persons. Legal entities cannot marry, they usually cannot vote or hold public office, and in most jurisdictions, there are certain positions which they cannot occupy. The extent to which a legal entity can commit a crime varies from country to country.
Legal Risk
Risk from uncertainty due to legal actions or uncertainty in the applicability or interpretation of contracts, laws or regulations.
Letter of Comfort
It can be very hard for a prospective borrower to attain financing without a guarantee, especially when that borrower has affiliates that would logically be in a position to guarantee the borrower’s indebtedness (e.g. a parent corporation). While it is well within an affiliate’s rights to choose not to guarantee a debt, it puts the prospective debtor in a very tough situation. As a compromise, an affiliate of the borrower can give some kind of assurance to a creditor that falls short of a guarantee. This assurance often takes the form of a comfort letter, which is a statement made by the affiliate indicating their intention to ensure that a debt will be repaid. Classifying and categorizing the legal rights that flow from one of these comfort letters is very tricky. There must be some purpose to a comfort letter, some value that is provided by the author of the letter that induces a creditor to extend credit where they otherwise would not. That being said, ostensibly, the letter is not a full guarantee, otherwise the author of the comfort letter would have simply agreed to give a guarantee in the first place. Comfort letters are commonly requested, and their inclusion in a financing is often the subject of intense negotiation, as is the precise wording of the document. See more at:
Letter of Intent
(see Memorandum of Understanding )
Letters Patent
A legal instrument by which a government conveys title or grants a right to a private entity. Under old companies laws, the government would grant letters patent for a company to be granted existence under terms set out in the laws.
The effect of fixed charges such as debt interest or preferred dividends on per-share earnings of common stock. Increases or decreases in income before fixed charges result in magnified percentage increases or decreases in earnings per common share. Leverage also applies to seeking magnified percentage returns on an investment by using borrowed funds, margin accounts or buying securities which require payment of only a fraction of the underlying security's value, such as rights, warrants or options.
Leveraged Buy Out (LBO)
A takeover financed to a large degree by debt that is secured, serviced and repaid through the cash flow and assets of the acquired company. Typically, an LBO is financed predominantly by bank debt and low quality bonds, and to a minimum degree by equity. Its extreme leverage makes an LBO dependent upon a stable economy and stable interest rates, as well as a stable cash flow from the acquired company for its success.
These are the debts and obligations of a company. Current liabilities are debts due and payable within one year. Long-term liabilities are those payable after one year. Liabilities are found on a company's balance sheet.
London Interbank Offer Rate (LIBOR)
LIBOR refers to any of a number of short-term indicative interest rates compiled by the British Bankers Association (BBA) at 11:00 AM London time each business day. For a given currency and maturity, Libor represents the simple interest rate at which banks are willing to lend Eurocurrency (i.e. Eurodollars, Euroyen, etc.) to each other. Because the loans are structured as deposits, Libor is called a deposit rate. As a practical matter, it is the interest rate at which the most highly-rated banks can borrow.
Limited Liability
When "limited" is at the end of a Canadian company's name, the company's shareholders' responsibility for the debts of the company is limited to the amount of money they paid to buy the shares. In contrast, ownership of a company by a sole proprietor or partnership carries unlimited personal legal responsibility for debts incurred by the business.
Limited Partnership
A partnership consisting of one or more general partners, who have unlimited liability, and one or more limited partners, who have limited liability depending upon their contribution to the partnership. Often the limited partner contributes financially but is not otherwise involved in the business.
Limited Liability Partnership
In Canada, a limited liability partnership is often only available to groups of professionals, such as doctors, lawyers and accountants. These partnership agreements are governed by specific provincial legislation. For example, currently in Ontario only lawyers, chartered accountants and certified general accountants may form a Limited Liability Partnership.
Line of Credit
Agreement between a bank and a customer for funding up to a previously agreed-to maximum amount; the customer may borrow as much of the "line" as is required and pay interest on the borrowed portion only.
The process of converting property and securities into cash. When a company is dissolved or closed down, cash remaining after sale of its assets and payment of all indebtedness is distributed to the shareholders, beginning with the preferred shareholders and ending with the common shareholders.
This refers to how easily securities can be bought or sold in the market. A security is liquid when there are enough units outstanding to allow large transactions without a substantial change in price. Liquidity is one of the most important characteristics of a good market. Liquidity also refers to how easily investors can convert their securities into cash and refers to a corporation's cash position, i.e. how much the value of current assets exceed current liabilities.
Long-term incentive plan
Long-term incentive plan or LTIP is an arrangement providing incentive pay for satisfying or exceeding pre-established performance measures over a performance period of two or more years. See also “annual bonus plan.” Performance measures are more frequently including measures of non-financial perspectives included in a balanced scorecard evaluation. See also “balanced scorecard evaluation.”


Management's Discussion and Analysis (MD&A)
Financial statements must be accompanied by the MD&A. The MD&A is a narrative explanation, through the eyes of management, of how a company performed during the period covered by the financial statements, and of the company's financial condition and future prospects. The MD&A supplements, but does not form part of, financial statements and is required to be filed at the same time as the financial statements. For further information, see Part 5 of National Instrument 51-102 Continuous Disclosure Obligations and Form 51-102F1
Management Proxy Circular
The document that management of a distributing corporation or a corporation with more than fifty shareholders incorporated under the CBCA must send to shareholders in connection with shareholder meetings. Its form is prescribed by regulation and includes general disclosure about the corporation as well as specific disclosure about the items of business to be dealt with at the meeting. Some corporations incorporated in other jurisdictions, including all public companies, are required to distribute management proxy circulars as well. CBCA, s. 150, CBCA Regulations, ss. 56–56, National Instrument 51-102, Form 51-102F5. Source: Published in The Law of Partnerships and Corporations, 3d ed. by J. Anthony VanDuzer
Market Regulation Services Inc. (RS)
Organization created as a joint initiative of The Toronto Stock Exchange Inc. and the Investment Dealers Association of Canada, whose mandate is to foster investor confidence in the Canadian securities market and to safeguard investor protection through the administration, interpretation and enforcement of a common set of trading rules consistently in all markets in Canada.
Mark to Market
The process of calculating a market value for an asset.
Memorandum of Understanding (MOU)
An MOU is a document that expresses mutual accord on an issue between two or more parties. Memoranda of understanding are generally recognized as binding, even if no legal claim could be based on the rights and obligations laid down in them. To be legally operative, a memorandum of understanding must (1) identify the contracting parties, (2) spell out the subject matter of the agreement and its objectives, (3) summarize the essential terms of the agreement, and (4) must be signed by the contracting parties. Also called letter of intent.
In corporate law a merger is the joining together of two corporations in which one corporation transfers all of its assets to the other, which continues to exist. In effect, one corporation “swallows” the other, but the shareholders of the swallowed company receive shares of the surviving corporation. A merger is distinguished from a “consolidation” in which both companies join together to create a new corporation.
Permanent, formal, and detailed (although not verbatim) record of business transacted, and resolutions adopted, at a firm’s official meetings such as board of directors, manager’s, and annual general meeting (AGM). Once written up (or typed) in a minute book and approved at the next meeting, the minutes are accepted as a true representation of the proceedings they record and can be used as prima facie evidence in legal matters.
Minority Interest
This appears on consolidated financial statements where the parent company's figures are combined with those of its subsidiaries. Even if the parent company owns less than 100% of a subsidiary's stock, all of the subsidiary's assets and liabilities are combined in the consolidated financial statements. To compensate, the part not owned by the parent company is minority interest and is shown as a liability on the balance sheet and deducted in the earnings statement.
The Mondragón Cooperative Corporation, or MCC, is often considered the most successful example of worker-owned enterprise in the world. Taking its name from the small town in the Basque Country of Spain where it was founded, the MCC’s reach now extends across Spain, Europe and the globe. Its highly integrated network of cooperative businesses competes successfully with conventional corporate rivals both locally and worldwide. Virtually all the co-operative companies in the MCC have the same by-laws and internal structure. The General Assembly of worker-members is the highest authority in the firm and makes decisions based on the principle of one member-one vote.
A motion is an action suggested by a member of the meeting. In order for a motion to be considered, it must be seconded by another member. At this point, the body must vote whether to approve the motion or reject it. Normally motions relate to postponing the legislation or calling the body to vote. Motions among motions are the motion to table, which means to set aside the topic at hand and move to another topic, a motion to commit, which means to refer a motion to a smaller committee it would be fitting for, a motion to previous question, which calls for an immediate vote and an end to deliberation, and a motion of no confidence, used to express dissent toward or a lack of faith in those in power. Any member of a meeting can propose a motion at any time.
Multilateral Instrument
Multilateral Instruments are rules that are not adopted by every jurisdiction. This means that at least one province or territory has “opted-out” of the rule and that at least two CSA members are adopting them. Rules adopted just by one CSA member are called “local rules”. The provinces do not have to adopt anything. Each province keeps its independence and the harmonization of all of the rules across Canada is voluntary as opposed to mandatory.
Mutual Fund Dealers Association (MFDA)
The MFDA is the national self-regulatory organization (SRO) for the distribution of the Canadian mutual fund industry.


National Association of Securities Dealers (NASD)
The National Association of Securities Dealers, Inc. This is the American self-regulatory organization of the securities industry responsible for the regulation of NASDAQ and the over-the-counter markets.
National Association of Securities Dealers Automated Quotation System (NASDAQ)
The National Association of Securities Dealers Automated Quotations System, the electronic, over-the-counter, screen-based communications system used by the second largest U.S. securities market.
National Instrument
National Instrument is a name provided to a rule, binding in nature, that has been adopted by every securities regulator in Canada. This means that since securities regulation falls under provincial jurisdiction each of the ten provinces and three territories in Canada must follow their own local procedures regarding the adoption of rules or regulations. These procedures differ from province to province, as well as ministerial approval procedures and the number of days that a project needs to be published for comments differs from province to province. The procedure for adopting rules is different, the rule itself (National Instrument) is the same.
National Policy
Provincial securities regulators may also adopt policies of a non-binding nature, including their interpretations of rules made by them. Policies must also be published for comment but contrarily to rules, policies do not require Ministerial approval to become effective. In general, unlike rules, policies may not be prohibitive or mandatory in character. Policies inform market participants of (a) how the regulator may exercise its discretionary authority, (b) how they interpret the law. Policies that are published together with the instrument are named Companion Policies.
Process whereby securities transactions are pooled and buy and sells are offset with each other, resulting in one final long or short position for each participant; netting may take several forms that have varying degrees of legal enforceability in the event of default of one of the parties. (Source: G-30, BIS)
Nominee Director
A nominee director may be defined as a person appointed to a corporate board of directors with an underlying understanding that he will represent the particular interests of a person or group of persons, most often the interests of his appointer.22 As such, nominee directorship is frequently characterized by an “extraneous loyalty” towards an outside interest. See also:
Non-Compete Agreement
A contract limiting a party from competing with a business after termination of employment or completion of a business sale. Usually the agreement will define a length of time, geographic radius in miles, and type of activity in which the employee promises to refrain from working after leaving her or his job.
Non Governmental Organization
An NGO (Non-governmental organization) is almost synonymous with non-profit or voluntary organization. The term is, however, most commonly used in Anglo-America to refer to international development agencies. In Quebec or Europe it still suggests emphasis on international development, but may be more broadly understood to also refer to voluntary organizations.
Non Objecting Beneficial Owner (NOBO)
A beneficial owner who gives permission to a financial intermediary to release the owner’s name and address to the company(ies) or issuer(s) in which they have bought securities. Companies and issuers request this personal information so they can contact the shareholder regarding important shareholder communications (such as proxies, circulars for rights offerings and annual/quarterly reports).

A beneficial owner of a security is someone who has a security or securities held by a financial intermediary. This tends to be the individual’s broker, or, in some cases, it may be another financial intermediary the person is associated with. An objecting beneficial owner (OBO)instructs the financial intermediary who holds the securities to not provide the owner’s name and personal information to the company that issued the securities. When you set up your account with a broker, you will often have the choice as to whether or not you would like your information released to the companies in which you purchase shares.

Not for Profit Corporation People in non-profit corporations come together to either benefit members of an organization or for some public purpose, such as a hospital, environmental organization or literary society. Non-profit corporations can make a profit, but the business cannot be designed primarily for profit-making purposes, and the profits must be used for the benefit of the organization or purpose that inspired the corporation. These corporations can apply for tax-exempt status at both the federal and provincial level. Not-for-profit corporations in Canada must file not-for-profit articles of incorporation under the Not for Profit Corporations Act, or under various provincial acts.

Newly Updated Automated Name Search – NUANS is a computerized search system that compares a proposed corporate name or trade-mark with databases of existing corporate bodies and trade-marks. This comparison determines the similarity that exists between the proposed name or mark and existing names in the database, and produces a listing of names that are found to be most similar.


Objecting Beneficial Owner
(see Non Objecting Beneficial Owner)
Officers The directors appoint officers. They manage the daily affairs of the corporation. A corporation's officers usually consist of a president, vice-president, treasurer and secretary. In most jurisdictions , one person can hold all of these posts.
Office of the Superintendent of Financial Institutions (OSFI)
Primary regulator of federally chartered financial institutions and federally administered pension plans; its mission is to safeguard policy holders, depositors and pension plan members from undue loss by supervising and regulating all banks and all federally incorporated or registered trust and loan companies, insurance companies, cooperative credit associations, fraternal benefit societies and pension plans.
Operational Risk
Risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events
Oppression Remedy
The most important ad flexible remedy available to minority shareholders is the oppression remedy. Oppression occurs when a dominant power in the organization exercises that power abusively to the detriment of the complainant. See also S. 2412(2) CBCA. Potential complainants under the CBCA are shareholders (past and present), directors and officers of the corporation or its affiliates, the Director appointed under the relevant legislation, and any other person the court decides may properly make the application.
Options (see ‘Stock Options’)
An investor who purchases an option has the right, but not the obligation, to buy or sell certain securities at a specified price within a specified time. A put option gives the holder the right to sell the security, a call option gives the right to buy the security.
Organizational Meeting
 The initial meeting where the formation of the corporation is completed. At the organizational meeting a number of initial tasks are completed such as: the articles of incorporation are ratified, the initial shares are issued, officers are elected, bylaws approved, and a resolution authorizing the opening of bank accounts is passed. If the initial directors are named in the articles of incorporation, they can hold the organizational meeting. If they are not named, then the organizational meeting is held by the incorporator.
Outstanding Shares
Securities that have been issued and sold to shareholders are referred to as outstanding.


Parliamentary Procedure
Parliamentary procedure is the set of rules and bylaws adopted by various groups, ranging from the United States House of Representatives to high school Model United Nations clubs. Though its forms differ greatly between locations where it is implemented, the end goals of parliamentary procedure are the same, including equal opportunity for all members and to maintain orderly, accepted procedure. Parliamentary procedure attempts to ensure civil deliberation among members of an entity by guaranteeing equal rights and opportunities to those involved. Two of the main forms of parliamentary procedure are based on books – the one most commonly seen in the United States is based on Mason’s Manual, which focuses on ensuring democratic voting, as well as equal access and privileges to all those involved. Mason’s Manual was written specifically to help legislative bodies run more smoothly, with its egalitarian, democratic framework for parliamentary procedure. Robert’s Rules of Order was the first set of published rules of parliamentary procedure published in book form. It was published in 1876 and laid the groundwork for what has since become modern parliamentary procedure. Robert’s Rules of Order, unlike Mason’s Manual, was not intended for governmental use, rather for other societal entities and groups. Both forms strive to protect all voices in the group, even those which have little to no support. Robert’s Rules of Order and Mason’s Manual are both highly complex systems, with Mason’s Manual being the more stringent as it was designed for matters of legislative significance.

Parliamentary procedure is most often used by governing entities, and elected representatives are generally the ones who partake in such deliberation. One of the core values of parliamentary procedure is to ensure that everyone has an equal opportunity to speak, regardless of whether they are in the majority or minority. This was first developed in Robert’s Rules of Order, for the sake of both guaranteeing the rights of the majority and protecting the rights of the minority. All forms of parliamentary procedure strive to ensure equality among all participants, regardless of majority or minority status. Speakers take turns giving speeches and addressing questions from other participants. 

An arrangement whereby two or more persons combine some or all of their resources, skill or industry with the object of making a profit which will be shared by all the partners. The partnership may be universal, embracing all the activities of the partners, or relate only to a particular business activity . Like a sole proprietorship, the partners are the business and are liable for all the losses of the partnership but retain all the profits.
Par Value
The par value of a share is the nominal value of the shares as set out in the articles of the corporation. The CBCA only permits shares to be issued with no par value.
Pay for Performance
Incentive packages based on financial incentives to an individual that are payable if certain performance targets are achieved. Performance targets can relate to a rise in profits, growth in sales, growth in earnings per share or to non-financial performance criteria.
Personal Property Security Act (PPSA)
Ontario, New Brunswick, Saskatchewan, British Columbia, Manitoba and Yukon all have PPSA legislation. PPSA is the regime for the registration of a security interest, which includes just about any interest in personal property which secures payment. Once registered, the security interest is enforceable against third parties. Generally speaking, the date of registration determines the rank and order of priorities if the item has been attached by more than one creditor. Registrations are indexed by the name of the debtor so you can do a search under a person's name to see if they have any security interests registered against their personal property
Piercing the Corporate Veil
If corporate formalities are not followed, it is possible that the corporate entity will not protect shareholders from corporate debt. Keeping proper records and holding regular meetings help solve this possible problem.
Poison Pill
An arrangement that provides for something to occur in the event of a successful takeover, making the acquisition less attractive to the buyer. Poison pills are intended to deter hostile takeovers and are considered detrimental to good corporate governance.
Power of Attorney
A power of attorney is an instrument authorizing another to act as one’s agent or attorney. It is written evidence of an agency agreement . In Quebec, the contract of agency is referred to as a mandate – the principal is known as the mandatory, and the agent or attorney is the mandatory
Preferential Creditor
See Creditor.
Preferred Shares
Shares which generally provides the shareholder with preferential payment of dividends but does not carry voting rights. If a corporation is to have preferred shares, this fact must be stated in the articles of incorporation.
Private Foundation
In Canadian law a private foundation has the following characteristics:1) is established as a corporation or a trust; 2) has exclusively charitable purposes; 3)carries on its own charitable activities and/or funds other qualified donees, (e.g., registered charities); 4) may have 50% or more of its governing officials not at arm's length with each other; 5) generally receives the majority of its funding from a donor or a group of donors that are not at arm's length; and 6)its income cannot be used for the personal benefit of any of its members, shareholders, or governing officials.
Private Placements
Sale of a bond or other security directly to a limited number of investors; required to meet reduced regulatory requirements.
Legal document describing securities for sale, including information relative to the issuer’s operations, management, etc.
Proxy Vote
A vote delivered by an individual (the proxy) on behalf of a shareholder , in the shareholder’s absence. The absent shareholder gives instructions to the proxy on how to vote, or may also give the proxy discretion in how to vote. It also refers to the written authorization allowing one person to act on behalf of another. This authority is generally provided by the charter and bylaws of a corporation or by a state statute. If authority is not provided, a stockholder cannot vote by proxy. The record owner of the stock whose name is registered on the corporate books is the only individual who can delegate the right to vote. In the absence of an express requirement, no particular form is necessary for a proxy. It must, however, be evidenced by a sufficient written grant of authority. A proxy is not invalid if minor errors or omissions appear on the document.

Generally, any power that a stockholder possesses at a corporate meeting can be delegated to a proxy. An ordinary proxy can vote on regular corporate business, such as the amendment of the bylaws. The proxy is not authorized to vote, however, on extraordinary corporate business, such as a merger, unless given special authority to do so. When a proxy acts within the scope of her authority, under agency principles, the stockholder is bound as if she acted in person.

A proxy can be revoked at any time, unless it is coupled with an interest or made expressly irrevocable.

The sale of a stockholder’s shares automatically revokes any proxies previously given to vote those shares. A proxy can also be revoked when the stockholder gives a subsequent proxy or attends the meeting in person. A stockholder can act as a proxy for another shareholder, but it is not necessary for a proxy to be a stockholder.

Public Private Partnerships (PPP)
PPP’s are partnerships between private companies and public bodies in a joint venture to perform projects and programmers for the public good.


Qualified Opinion
A qualified opinion is an opinion in which the auditor believes the financial statements give a true and fair view, except for a particular matter, which the auditor will explain in the opinion.
The minimum attendance required to conduct business at a meeting. Usually, a quorum is achieved if a majority of directors are present (for directors meetings) or outstanding shares are represented (for shareholder meetings). The percentage needed for a quorum may be modified in the bylaws.


Rate of Return
(see Return on Investment)
Record Date
The day a company sets as the last day people can buy stock and receive such things as dividends or rights. These people are called stockholders of record.
Registered Office
The office named in the articles of incorporation. The registered office must be where the attorney for service is located, and need not be the principal office or place of business of the corporation.
Reporting Issuer
A corporation that has issued and outstanding securities held by the public and is subject to the continuous disclosure requirements of securities administrators.
The meaning of the term "resolution" depends on the context. It can mean: a written record of decisions taken in lieu of an organizational meeting; a decision made at an annual or special meeting based on the required number of votes in favour by shareholders entitled to vote; or, a document signed by all shareholders in lieu of a meeting of shareholders.
Restricted Shares
Shares that have limited voting rights or in some cases, no voting rights. These shares participate in a company's earnings and assets in liqu/pation as common shares do and are sometimes referred to as restricted common shares. Restricted shares may not command the same market price as voting common shares of the same company since they do not have voting rights.
Return on Investment (ROI)
ROI is the earning power of assets measured as the ratio of the net income (profit less depreciation) to the average capital employed (or equity capital) in a company or project. Usually expressed as a percente, return on investment is a measure of profitability that indicates whether or not a company is using its resources in an efficient manner. For example, if the long-term return on investment of a company is lower than its cost-of-capital, then the company will be better off by liquidating its assets and depositing the proceeds in a bank. Also called rate of return, or yield.
Risk Appetite
The level of risk that an organisation is prepared to accept, before action is deemed necessary to reduce the risk. By defining its risk appetite, an organization can arrive at an appropriate balance between uncontrolled innovation and excessive caution. A defined acceptable levels of risk also means that resources are not spent on further reducing risks that are already at an acceptable level.
Risk Tolerance
The ability of an organization to survive the losses associated with risks it has assumed.


Sarbanes Oxley Act
Enacted in the United States as a reaction to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom. These scandals, which cost investors billions of dollars when the share prices of affected companies collapsed, shook public confidence in the nation's securities markets. The act contains 11 titles, or sections, ranging from additional corporate board responsibilities to criminal penalties, and requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the law. The Sarbanes-Oxley Act created new standards for corporate accountability as well as new penalties for acts of wrongdoing. It changes how corporate boards and executives must interact with each other and with corporate auditors. It removes the defence of "I wasn't aware of financial issues" from CEOs and CFOs, holding them accountable for the accuracy of financial statements. The Act specifies new financial reporting responsibilities, including adherence to new internal controls and procedures designed to ensure the validity of their financial records. SOX applies to all public companies in the U.S. and international companies that have registered equity or debt securities with the Securities and Exchange Commission and the accounting firms that provide auditing services to them.
Secondary Distribution
The redistribution of a block of stock after it has been initially sold by the issuing corporation. Usually a large block of shares is involved (e.g. from the settlement of an estate) and these are offered to the public at a fixed price, set in relationship to the share's market price.
Secondary Market
Secondary markets are the stock exchanges and the over-the-counter market. Securities are first issued as a primary offering to the public. When the securities are traded from that first holder to another, the issues trade in these secondary markets.
Secondary Offering
( see Secondary Distribution)
Secret Profit
A profit that is not revealed. Corporate directors and officers are forbidden from making a secret profit for their benefit and at the expense of the organization.
Secured Creditor
See Creditor
Securities and Exchange Commission (SEC)
The SEC is a federal body established by the United States Congress as a national U.S. regulatory authority. In Canada, there is no national regulatory authority because securities legislation is provincially administered.
1. The development of markets for a variety of debt instruments that permit the ultimate borrower to bypass the banks and other deposit-taking institutions and to borrow directly from lenders. 2. In a narrow sense it also refers to the process of converting loans of various sorts into marketable securities by packaging the loans into pools and then selling shares of ownership in the pool itself.
Self-Regulatory Organizations (SROs)
Many important rules governing securities industry practices and standards in Canada are set by the self-regulatory organizations, which include the Vancouver, Alberta and Toronto Stock Exchanges, the Montreal Exchange and the Investment Dealers Association of Canada. Many of the regulatory and compliance functions have been delegated to the SROs by the provincial securities administrators.
Shareholder Activism
A term that refers to the considered use by institutional investors of their rights as shareholders, by voting against the board of directors at shareholders’ meetings, or applying pressure on the board and management to makes changes under the threat of adverse voting. It includes the active dialogue with boards of corporations to influence decisions by the board. See also ‘CCGG’
Shareholders' Equity
Ownership interest of common and preferred shareholders in a corporation. It is also the difference between the assets and liabilities of a corporation , which is sometimes called net worth, or just "equity."
Shareholder of Record
A shareholder whose name is registered in the records of a corporation whose shares he or she holds. Dividend payments and rights issues are announced as being payable to shareholders of record.
Short Sale
Sale of a borrowed security.
Signing bonus
Signing bonus or signing-bonus plan is an arrangement providing a candidate with a bonus or other additional compensation if he or she becomes a service provider. It is similar to a retention bonus or plan, but is typically to attract someone to become, rather than retain someone as, a service provider.
Sinking Fund
A fund set up by a corporation to retire, over a period of time, the major part of a preferred share issue, or a debt issue prior to maturity. The fund helps to "pay off" the debt issue over the term of the issue and can be compared to principal payments made by a mortgage holder. Even though the issue is outstanding until maturity, the small incremental payments made under a sinking fund can make the maturity of the bond issue less onerous on the company. Instead of having to re-fund the entire issue, there may only be a small outstanding balance. A sinking fund security is attractive to investors as there is more assurance that the debt will be repaid on maturity.
Socially responsible investment
Socially Responsible Investment or, Ethical Investment is the strategy of making investment decisions to achieve a social, environmental as well as financial return. Socially responsible investment identifies companies that are deemed to be financially sound, and then considers labour environmental, social and ethical issues in the assessment opportunity and risk. There are three basic strategies used by socially responsible investors: (1) screening companies based on a range of social and environmental criteria; (2) shareholder activism to change company policy through filing shareholder resolutions and meeting with company management and (3) community investing which provides low interest loans to support development in low-income communities. 
Sole Proprietorship
A sole proprietorship is a business owned and operated by one individual. Legally, if you set up your business as a sole proprietorship, your business is considered to be an extension of yourself. Therefore, as a sole proprietor, you are personally responsible for all the liabilities and obligations your business incurs. This means that if the business fails, any of your assets, including your personal assets, can be seized to discharge the liabilities owing.
On the positive side, a sole proprietorship is the easiest form of business to set up. If you operate your business under your own name, with no additions, you don't even need to register your business name to start operating as a sole proprietor. 
Special Purpose Vehicle
Also called a special purpose entity (SPE), an SPV is a firm or legal entity established to perform some narrowly-defined or temporary purpose. The sponsoring firm accomplishes that purpose without having to carry any of the associated assets or liabilities on its own balance sheet. The purpose is achieved "off-balance sheet."
A person, group, or organization that has direct or indirect stake in an organization because it can affect or be affected by the organization's actions, objectives, and policies. Key stakeholders in a business organization include creditors, customers, directors, employees, government (and its agencies), owners (shareholders), suppliers, unions, and the community from which the business draws its resources. Although stakeholding is usually self-legitimizing (those who judge themselves to be stakeholders are stakeholders ), all stakeholders are not equal and different stakeholders are entitled to different considerations. For example, a company’s customers are entitled to fair trading practices but they are not entitled to the same consideration as the company's employees.
Statement of Changes in Financial Position
A financial statement which provides information as to how a corporation generated and spent its cash during the year. It links the corporation's balance sheets for two successive years and provides a summary of the incoming and outgoing movement of a company's funds for the period. It explains changes in working capital (current assets less current liabilities) from one year to the next.
Statement of Material Facts
A document presenting the relevant facts about a corporation and compiled in connection with an underwriting or secondary distribution of its shares. It is used only when the shares underwritten or distributed are listed on a recognized stock exchange and takes the place of a prospectus in such cases.
State Owned Enterprise
A legal entity that is created by the government in order to partake in commercial activities on the government's behalf. A state-owned enterprise (SOE) can be either wholly or partially owned by a government and is typically earmarked to participate in commercial activities. SOE’s are a major part of industry in China.
Stock Dividend
Dividends paid to shareholders in shares of stock rather than cash.
Stock Options (see also Options’)
Instrument s giving the holder the right (nut not the obligation) to subscribe for shares of a corporation at a predetermined price (the exercise price). When issued, stock options are usually exercisable at any time after a given exercise date up to a final date when they expire. If the share price rises on the market, the holder stands to make an immediate profit by exercising the options (buying shares at the exercise price) ad immediately selling them at the current market price.
Stock Split
Division of a company's outstanding common shares into a larger number of common shares. A three-for-one split by a company with one million shares outstanding would result in three million shares outstanding. Each holder of 100 shares before the three-for-one split would have 300 shares after the split, but his or her proportionate equity in the company would remain the same.
Sustainability Reporting
A report by a socially responsible organization on its social, ethical, health and safety and environmental policies and procedures. The global GRY Reporting initiative is currently the best known reporting initiative. See also
Sustainable Development
Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
System for Electronic Document Analysis and Retrieval (SEDAR)
System developed by the CSA, Canadian stock exchanges and CDS INC.; required to be used by issuers of publicly traded securities in Canada and Canadian mutual funds to complete electronically their securities regulatory filings with securities regulators and stock exchanges; also accessible to the public; usually referred to as “SEDAR.”


Takeover Bid
The amount a company or group of investors is willing to pay in order to acquire a company. The bid is an offer to the shareholders of the target company. The shareholders will have to approve of the bid before an acquisition can be made, and can vote to hold out for more money from the acquiring company or to wait for a competing bid. See
Common term for a government treasury bill, which is a short-term government debt issue. See also Treasury Bills
Timely Disclosure
The obligation for companies to promptly release to the news media any favourable or unfavourable corporate information which is of a material nature. This obligation is imposed by the securities administrators on companies. Broad dissemination of this news allows all investors to trade the company's securities with the same knowledge about the company as insiders.
Toronto Stock Exchange (TSX)
Stock exchange incorporated by an act of the Province of Ontario in 1918; trading until late 1999 included 2000 equity securities, equity and non-equity options, futures contracts, silver options, bond options, warrants on Canada bonds, currency and treasury bill futures; under a restructuring agreement between Canada's exchanges, the TSX became the senior equity exchange when junior issues moved to the Western Canadian Venture Exchange and derivatives moved to the Montreal Exchange; in 2001, the TSX acquired CDNX, thereby consolidating the trades for both junior and senior equities in Canada.
Transfer Agent
A trust company, bank or similar financial institution assigned by a corporation to maintain records of investors and account balances and transactions, to cancel and issue certificates, to process investor mailings and to deal with any associated problems (i.e. lost or stolen certificates). Because publicly-traded companies, mutual funds and similar entities often have many investors who own a small portion of the organization, require accurate records and have rights regarding information provision, the role of the transfer agent is an important one. Some corporations choose to act as their own transfer agents, but most choose a third-party financial institution to fill the role.
Treasury Bills
Short-term government debt, usually issued in trading units of $250,000 and sold chiefly to large institutional investors. Treasury bills do not pay interest but are sold at a discount and mature at par (100). The difference between the purchase price and par at maturity represents the purchaser's income in lieu of interest. In Canada such gain is taxed as interest income in the purchaser's hands.
Treasury Shares
Authorized but unissued shares of a corporation, or previously issued shares that have been re-acquired by the corporation.
  1. Usually a trust company appointed by the company to protect the security behind the corporation's bonds and to make certain that all covenants of the trust deed relating to the bonds are honoured.
  2. A person who holds property and securities in trust for another person.
Two-tier Board
A board structure with two boards, a supervisory board comprised of non-management directors and a management board comprised of management directors. The CEO heads the management board and reports to the Chairman of the supervisory board . Governance responsibilities are divided between the two boards. Germany notably uses this board structure. See also ‘unitary board’.


Ultra Vires

Traditionally, the purpose of a corporation was closely spelled out in its articles of incorporation. If the corporation acted beyond its described purposes these actions were unenforceable against the corporation or by the corporation. However, most modern statutes allow corporate purposes to be any lawful activity.

Unanimous Written Consent
Nearly all jurisdictions allow directors and shareholders to act without a meeting if they each give their consent to specific corporate actions in writing.
Unitary Board
Board structure where the organization has just a single board of directors, consisting of management directors and non-management directors. A unitary BOARD STRUCTURE IS USED IN Canada, the US and the UK. See also ‘two-tier board’.
The purchase for resale of a security issue by one or more investment dealers or "underwriters." The formal agreements pertaining to such a transaction are called "underwriting agreements."
Unqualified Opinion
An unqualified audit report is given when the auditor believes the accounts give a fair and true picture of the corporation’s financial position and performance.
Unsecured Creditor
See Creditor


In a meeting, after everyone who wanted to speak has gotten the chance to, there is normally a motion to vote. Voting can be spoken (yea or nay) en masse, written in ballot form, conducted by counting raised hands, or each member of the body will be individually asked his or her vote, depending on the group and its bylaws. Votes are then tallied if needed, and the winner is announced after all votes have been counted. Each individual’s vote is equal, as the system is democratic. In some organizations, the facilitator, often a chairperson of some sort, is granted the power to break ties.
Voting Right
The stockholder's right to vote in the affairs of the company. Most common shares have one vote each and preferred stock usually only has the right to vote when its dividends are in default. The right to vote may be delegated by the stockholder to another person, called voting by proxy. Voting rights give the stockholder a say in the company's affairs and such rights can increase the value of the stock.
Voting Trust
A device to place the control of a company in the hands of certain managers for a given period of time, or until certain results have been achieved. This is done by shareholders surrendering their voting rights to a trustee for a specified period of time.


An individual, usually an employee, who reports concerns about misconduct by someone in the organization. A whistleblower does not use normal lines of reporting, but instead has access to a senior official or an independent person outside the organization, such as the press or a regulatory authority. Under Sarbanes Oxley in the US and the Audit Committee Rules in Canada, whistleblowers have gained a certain amount of protection from retaliation.
Working Capital
Current assets of a company minus its current liabilities. This figure shows the company's liquidity and ability to meet its short-term debts.
Working Capital Ratio
Current assets of a company divided by its current liabilities. This is a measure of a company's liquidity.



This is the measure of the return on an investment and is shown as a percentage. A stock yield is calculated by dividing the annual dividend by the current market price of the stock. For example, a stock selling at $80 and with an annual dividend of $8.00 per share yields 10%. A bond yield is a more complicated calculation, involving annual interest payments plus amortizing the difference between its current market price and par value over the life of the bond.


The Governance Professionals of Canada (GPC) was created in 1994, shortly after the Dey Report was published by the TSX on ‘Where Are the Directors’. GPC‘s mandate is to be the voice of governance professionals in Canada. Its members deal with all matters affecting corporate governance, from board and committee processes, management and structure, disclosure, stakeholder engagement, legal and corporate compliance, as well as issues crucial to boards, their accountability and oversight.