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Directors of Crown Corporations: An Introductory Guide to Their Roles and Responsibilities


Preface

This Guide addresses an important aspect of corporate governance – the roles and responsibilities of the Crown corporations director. As a Guide, it presents an introductory overview of a director's role and other general information primarily intended to meet the needs of new appointees to the boards of federal Crown corporations.

The Guide explains both the key characteristics distinguishing Crown corporations from the other organizational forms used by the Government of Canada and the nature of the relationships Crown corporations have with the other parts of government.

Instead of addressing all of the director's roles and responsibilities, the Guide focuses on four primary responsibilities: establishing the corporation's strategic direction, safeguarding the corporation's resources, monitoring corporate performance, and reporting to the Crown.

We are confident this Guide will help new members of boards of directors to better appreciate the challenge and the opportunity of serving as a director of a Crown corporation.

We wish to thank Gary Sheehan, a Director of the Crown Corporations Directorate; Robert Nichols, former faculty member, Advanced Management Group, Canadian Centre for Management Development; and John Longair, Senior Research Associate, The Conference Board of Canada, for researching and authoring this guide. Thanks also are due to a number of individuals from various government departments who critiqued this document and offered valuable comments and suggestions.


David A. Dodge
Deputy Minister
Department of Finance
I.D. Clark
Secretary of the
Treasury Board
James R. Nininger
President & C.E.O.
The Conference Board of Canada
Ole Ingstrup
Principal
Canadian Centre for Management Development

Introduction

One major shareholder asked a very experienced, very capable engineer who was part-owner and senior manager of a very successful privately owned construction company to become a director of a corporation. As an engineer and a successful businessman, everything was going just great. He came up to me after the first meeting and said, "I haven't the faintest idea of what is expected of me as a director of a company, and l am either going to have to brush up on it or maybe you will tell me what is expected of me. I am lost".1

Appointment as a director of a Crown corporation is a unique opportunity to render valuable public service to the citizens of Canada. New appointees should anticipate that serving on the board of a Crown corporation will be challenging and satisfying, but they may feel somewhat like the person described in the above quote. The responsibility for overseeing the management of a Crown corporation demands practical advice and counsel. Directors are concerned with their corporation's strategic direction, the safeguarding of its resources, the monitoring of its performance and reporting on it.

While the directors are normally removed from the day-to-day decision making of the corporation, the director's role is vitally important. The corporation's management will present information, seek advice, and request the approval of proposals from the board of directors. Each director will be called upon to exercise his or her judgement and the independence of his or her position in formulating the board's decisions to approve, reject, or request deferral of the proposals brought by management for approval.

Crown corporation directors perform a valuable public service. Corporate governance will benefit from the combined individual talents of the select group of Canadians chosen for each Crown corporation's board of directors.


1 David Golden, former Chairman of the Board of Telesat Canada. [ return ]





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