As outlined in our prior bulletins on this issue, Canada’s new modern slavery legislation, the Fighting Against Forced Labour and Child Labour in Supply Chains Act (Act), requires reporting entities to complete and submit to the government a mandatory online questionnaire (Questionnaire) and report (Report) about the measures they have taken to address and prevent forced and child labour in their supply chains during their previous fiscal year. The Act came into force on January 1, 2024, and the initial Report is due by May 31, 2024 — or earlier for certain federally incorporated entities that provide their annual financial statements to shareholders before May 31 of each year.
To learn more about the developments surrounding this issue, see our previous May 2023 Blakes Bulletin: Parliament Passes Bill S-211: The New Forced Labour and Supply Chain Reporting Law, October 2023 Blakes Bulletin: Complying With Canada’s Forced and Child Labour in Supply Chains Act: Are You Ready?, and in December 2023 Blakes Bulletin: Part I: Canada Unveils Long-Awaited Guidance on Act Fighting Forced Labour and Child Labour in Supply Chains.
The Governmental Guidance (Guidance) released on December 20, 2023, provided some long-awaited insight into the Government of Canada's expectations and interpretation of the Act. In addition, the Government hosted a "technical briefing session" (Briefing Session) on January 11, 2024 that did not offer much more in terms of substantive guidance but did address some frequently asked questions.
In Part Two of this two-part bulletin series, we discuss some of the substantive implications arising from the Guidance and Questionnaire and provide an overview of the highlights from the Briefing Session.
On January 3, 2024, the Government released a text version of the Questionnaire, allowing entities to view the complete list of questions and improving the accessibility of the information necessary for entities to complete their Report. In approaching the reporting process, entities should ensure that all relevant parts of the business involved in the reporting process have access to the Questionnaire, and entities should ensure that they set aside sufficient time to adequately answer the questions in the Questionnaire.
In addition, to complete the Questionnaire, the reporting entity must confirm that it has included the text of the suggested attestation statement, verbatim. Notably, the Questionnaire process and filing of the Report cannot be completed without this confirmation.
The government has said that it considers a failure to complete the Questionnaire to be an offence under section 19(1) of the Act.
The Guidance provides general information and examples with respect to the reporting process, what type of information will likely satisfy the content requirements of the Report and where information from another jurisdiction’s reporting obligations may be acceptable. For example, the Guidance confirms the following:
- To have an obligation to submit a report, a corporation or a trust, partnership or other unincorporated organization must be an entity, as defined in section 2 of the Act, but must also be engaged in (a) producing, selling, or distributing goods anywhere, (b) importing goods into Canada, or (c) controlling an entity that is engaged in (a) or (b).
- An entity incorporated pursuant to the Canada Business Corporations Act, or any other Act of Parliament, must provide a copy of the Report to each shareholder, “along with its annual financial statements.” The Guidance does not provide any additional clarity as to the method or timing for delivery of the completed Report. As a result, federally incorporated or organized entities should consider how these requirements will be met in the context of the applicable corporate or other organizational statute and, in the case of public entities, applicable securities laws.
- The Act can have extraterritorial application as the definition of entity includes entities that are headquartered and operating in any country or jurisdiction. This means that the Act can apply to non-Canadian companies if they otherwise meet the test for being a reporting entity as described in our prior bulletin here.
- The Minister of Public Safety will maintain an online repository of the Reports that is searchable and publicly accessible. It is not clear whether the Questionnaire will form part of this database. It is likely, however, that the Questionnaire will be accessible to the public through the federal access to information process. Personal or confidential information should not be included in the Questionnaire responses.
In confirming the above, the Guidance provides some helpful commentary regarding the Government's interpretation of various aspects of the Act. Specifically, the Guidance:
- Directs entities to consider the words importing, selling and distributing "in their ordinary sense" to determine whether they are engaged in any of these activities while also noting that the terms as they are used in the Act are not intended to capture services that solely support the production, sale, distribution or importation of goods.
- Clarifies that an entity will be importing goods only where it is responsible for accounting for those goods under the Customs Act — i.e., the importer of record.
- Indicates that there is no prescribed minimum in the Act for the value of goods that an entity must produce, sell, distribute or import for the Act to apply. However, the terms as used in the Act should be understood to exclude "very minor dealings." No further guidance is provided about this very minor dealings exception.
- Indicates that whether one entity controls another entity should be assessed on a "substance over form" basis.
- Allows entities to include a description of the range of activities it may be taking that are not solely dedicated to child and forced labour such as human rights due diligence, environmental, social and corporate governance initiatives (ESG), and other aspects of responsible business conduct.
- Clarifies that the Report should not serve as an aspirational statement but should rather focus on concrete actions the entity has taken, with the understanding that some actions and steps may span multiple years.
- Defines "supply" chain to include suppliers of goods and services that contribute to the production of goods produced, sold, distributed or imported by the entity, from sourcing the raw materials to the final product. This, therefore, captures direct and indirect suppliers and service providers, both in Canada and outside Canada but excludes the end users or customers who purchase its products or services.
The Briefing Session
Public Safety Canada hosted an hour-long Briefing Session that included the following highlights:
- Public Safety Canada understands that given the recent coming into force of the Act, entities might not have measures to report on for some or all of the requirements. Entities are able to state this in their Report and would still be in compliance with the Act.
- A joint report should only be submitted if the information provided generally applies to all entities covered by the report. If information for each reporting entity differs significantly, individual reports should be filed.
- The link to complete the Questionnaire and submit a Report is open as of January 1, 2024.
The Guidance and Briefing Session have provided some substantive guidance on key aspects of the Act that will assist entities as they prepare their Reports. In advance of the reporting deadline, reporting entities should ensure their respective finance, governance and procurement departments are familiar with both the Act and the contents of the Questionnaire and Guidance.
For further information about any aspect of this bulletin, please contact:
or any member of our International Trade group.
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