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Hi, I'm Aaron Dhir, an Associate Professor
at Osgoode Hall Law School.
The modern business corporation touches all
of our lives in significant ways.
It employs us, it produces goods that we consume,
and it offers services from which we benefit.
The corporation has become the dominant form
of economic organization in many industrial societies.
But does the governance
of the corporation reflect the diversity
of the societies in which it operates?
And should it?
Many governments are starting to turn their attention
to the issue of demographic representation
on corporate boards and in senior management positions.
In Canada, women hold approximately 14 percent
of board seats at Financial Post 500 companies,
despite constituting more than 50 percent of the population.
The statistics are even lower for racialized groups.
Governments have sought to diversify the upper echelons
of their corporate sectors by pursuing one of two strategies.
Countries such as Norway, France,
Spain and Iceland have imposed corporate board
diversity quotas.
In Norway, for example, if the board
of a publicly-traded company has more than nine directors,
there must be at least 40 per cent representation
of men and women.
If not, the company risks dissolution.
This strategy reflects a fairly traditional approach
to legal regulation.
It is premised on a "command-and-control" model
under which the state seeks
to directly regulate corporate behavior.
This can be contrasted with the second approach,
found in countries such as the U.S. The Securities
and Exchange Commission recently adopted a rule
that requires publicly-traded companies to disclose
to the regulator
and to investors whether the firm considers diversity
in identifying nominees for directorships, and if so how.
This strategy demonstrates a more reflexive,
"new governance" approach to legal regulation.
It focuses on norm generation and the enhancement
of internal self-regulatory capacities.
It is anticipated that increased exposure will cause corporate
actors to voluntarily pursue corrective measures
and increase diversity.
Other jurisdictions, including Canada,
are presently considering the best path forward.
Diversification is one of the hottest topics
in corporate governance and it is the focus of my research
as the 2011 Scholar in Residence
with the Law Commission of Ontario.