In 2002 a Canadian study, the Report on Business, concluded that Canadian boards did not meet the new governance practices adopted by the New York Stock Exchange, in respect to the majority of their directors being independent, and having fully independent audit, compensation and nominating committees. The Report on Business found that almost fifteen per cent of companies listed in the S&P/TSX (Toronto Stock Exchange) index, had directors who sit on three or more boards together, most of them on the boards of Canada’s largest corporations. In particular, many directors of holding companies also serve on the boards of the subsidiaries of these companies. Some Canadians argued that the situation in Canada was different than in the United States, because Canada had more family owned, smaller and closely held companies than the U.S. Proponents of the Canadian system pointed to the benefits of having directors of the holding company who are familiar with the associated subsidiaries, so that directors have knowledge of how the whole operation works. Evaluate the arguments of those who oppose introducing the U.S. system into Canada.
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