Finance Canada Considers Eliminating The "30 Per Cent Rule"

On June 3, the Department of Finance, Canada (Finance Canada) released a consultation paper entitled "Pension Plan Investment in Canada: The 30 Per Cent Rule." Among other investment rules, federally regulated pension plans and certain other persons are restricted under federal law from holding more than 30 per cent of the voting shares to elect directors of a corporation. A similar rule exists in a number of provinces including Ontario and Québec. However, Québec has enacted legislation exempting the Caisse de dépôt et placement du Québec from this rule, and in its 2015 Budget, Ontario announced that it intends to eliminate the rule. In that context, the federal government is considering whether to eliminate the rule, is seeking stakeholder input on the usefulness of the rule, and has set out in the consultation paper considerations relating to prudential questions, investment performance effects and tax policy.