Canada’s Supply Chain Report Deadline Looming for Businesses
For Canadian businesses, it can be a daunting task to manage the constant influx of new and expanding regulatory requirements imposed on them. To add to the list, beginning on May 31, 2024, many Canadian businesses and businesses operating in Canada will need to provide annual supply chain reports to the Federal government.
What Businesses Will Need to Provide Supply Chain Reports?
The Fighting Against Forced Labour and Child Labour in Supply Chains Act (the “Act”)[1] came into force earlier this year and applies to businesses that produce goods or import goods into Canada. Fortunately, the reporting obligations under the Act only apply to businesses that meet certain thresholds, such as: i) being listed on a Canadian stock exchange, or ii) meeting certain minimum thresholds related to size of assets, revenue and total number of employees[2].
What Details Must the Report Include?
The report must include information related to the business structure, activities and supply chain for the business. The report must also identify those parts of the business and supply chain that carry a risk of forced labour or child labour and the steps the business has taken to assess and manage the risk. The report must also include details about the business’ policies, due-diligence processes and employee training activities aimed at ensuring forced labour and child labour are not part of its supply chain.[3]
What are the Consequences for Violation?
The report must be approved by the business’ governing body (i.e. Board of Directors). The governing body’s member that signs-off on the report is expected to attest that based on their knowledge and after exercising reasonable diligence, the information in the report is true, accurate and complete in all material respects. Failure to file a report or providing false information under a report can result in fines of up to $250,000 for the business. Moreover, Directors and Officers can also be personally liable for fines of up to $250,000 if they have authorized or participated in an offence under the Act.
Will the Public have Access to the Reports?
Reports are to be made public. For example, a business must post the report on its website in a prominent place. Reports will also be made available to the public on the Department of Public Safety and Emergency Preparedness website.
Further Information
For questions about the Act or the new requirements please refer to the following link: Jeff Van Damme – nNovation LLP
The above note is only a general overview and is not intended as legal advice.
[1] https://laws.justice.gc.ca/eng/acts/F-10.6/page-1.html
[2] The entity must have a place of business in Canada, does business in Canada or has assets in Canada and, based on its consolidated financial statements, meets at least two of the following conditions for at least one of its two most recent financial years: i) has $20 million or more in assets, ii) has at least $40 million in revenue, and iii) employs an average of at least 250 employees.
[3] The full list of requirements can be found at Section 11. https://laws.justice.gc.ca/eng/acts/F-10.6/page-1.html