Canada Gazette, Part I, Volume 159, Number 41: Regulations Amending the Canadian Payments Association Election of Directors Regulations

October 11, 2025

Statutory authority
Canadian Payments Act

Sponsoring department
Department of Finance

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

The Canadian Payments Association Election of Directors Regulations (the Regulations) set out the criteria for determining the independence of directors serving on Payments Canada’s Board of Directors (Board). Under the current Regulations, directors, senior officers, and employees of entities eligible to become Payments Canada members are prohibited from serving as independent directors, regardless of whether those entities are members.

Recent amendments to the Canadian Payments Act (the Act) expanded eligibility for Payments Canada membership to new regulated entities. With these changes, directors, senior officers, and employees of these newly eligible entities are barred from serving as independent directors, even if their organizations are not Payments Canada members and have no intention of becoming members.

The proposed amendments to the Regulations would allow directors, senior officers, and employees of eligible entities that are not members of Payments Canada to serve as independent directors on its Board, provided the eligible entities are not majority-owned or controlled by one or more members. In addition, the proposed changes would reduce the cooling-off period from three years to one to qualify as an independent director for those, for instance, who have been associated with a member as a former employee, Board director, or consultant. All other independence criteria would continue to apply, including prohibitions relating to contractual or business relationships and potential conflicts of interest, if that relationship could be reasonably expected to interfere with the exercise of a director’s independent judgment.

Background

The Canadian Payments Association (doing business as Payments Canada) is a statutory corporation with the mandate to establish and operate national systems for the exchange, clearing and settlement of payments between its members. The Act established Payments Canada and it establishes its objects and powers, its governance structure, and eligibility for membership, including both required and entitled member categories. Entities in the entitled member category may choose to become members of Payments Canada; however, not all have opted to do so. Only members are eligible to apply for participation in Payments Canada’s systems.

In 2015, the Canadian Payments Act was amended to update Payments Canada’s governance and accountability structures and ensure Payments Canada’s systems are operated for the benefit of Canadians and the economy. A central element of the reform was the introduction of a majority-independent board, based on the definition of “independent” within the Canadian Securities Administrators’ (CSA) National Instrument 52-110, which includes a three-year cooling-off period for independent directors. As a result of these reforms, Payments Canada now has a majority-independent Board, with 7 of the 13 directors being “independent of the Association and of its members” (subsection 8(1) of the Canadian Payments Act).

The criteria for director independence are set out in the Regulations, made under subsection 35(1) of the Act. Under paragraph 3(1)(c) of the Regulations, directors, senior officers or employees of entities that are eligible to become members of Payments Canada are not permitted to serve as independent directors, regardless of whether those entities have opted for membership. In addition, a three-year cooling-off period applies, meaning individuals must wait three years after ending certain professional, business or personal relationships or positions before becoming eligible to serve as independent directors.

Recent amendments to the Act, which received royal assent in June 2024, have expanded membership eligibility in Payments Canada to

With the large number of entities under the new PSP category becoming eligible for membership, many individuals with otherwise relevant expertise are now automatically precluded from the recruitment process for independent Board directors due to the current restriction that excludes individuals affiliated with any eligible entity, regardless of membership status. Similarly, the requirements related to independence under the Regulations have now been in place for 10 years, and Payments Canada has found that the 3-year cooling-off period has limited its ability to recruit qualified candidates.

Objective

The objectives of these regulatory measures are to

  1. allow directors, senior officers, and employees of entities that are eligible for Payments Canada membership, but are not members, to serve as independent directors on its Board, provided such eligible entities are not majority-owned or controlled by one or more members; and
  2. reduce the cooling-off period for independent Board directors from three years to one.

The measures aim to provide greater flexibility for Payments Canada to recruit independent directors with recent and relevant experience, while maintaining robust independence criteria.

Description

In connection with the amendments to the Act, the regulatory measures would amend the Regulations to

  1. allow directors, senior officers, and employees of entities that are eligible for Payments Canada membership, but are not members, to serve as independent directors on its Board, provided such eligible entities are not majority-owned or controlled by one or more members; and
  2. reduce the cooling-off period for independent Board directors from three years to one.

Regulatory development

Consultation

In August 2022, the Department of Finance (Department) held a consultation on expanding membership eligibility in Payments Canada to seek input on new regulated entities being proposed for Payments Canada membership, as well on certain governance provisions. That consultation built on the May 2018 consultation titled Review of the Canadian Payments Act.

This proposal takes into consideration feedback on governance received during both those consultations and the Government’s commitment to monitor the current Board structure and representation as membership evolves.

Payments Canada was consulted in the spring of 2025 on these proposals and provided the opportunity to comment on drafts of these Regulations. Payments Canada supports the proposed amendments to the Regulations.

Indigenous engagement, consultation and modern treaty obligations

The Department determined that the proposal would not have modern treaty implications and is not expected to result in specific impacts to Indigenous communities. As a result, specific Indigenous engagement and consultation were not required.

Instrument choice

The Act allows the Governor in Council to make regulations respecting the election of directors to Payments Canada’s Board, including setting the criteria for determining who is eligible to serve as an independent Board director. There are no viable alternatives to regulatory changes for achieving the desired outcome.

Regulatory analysis

Benefits and costs

The proposed changes do not impose a new administrative burden or associated costs on businesses, consumers, Canadians, or the Government. The changes do not alter the baseline cost of selecting or appointing new directors but rather broaden the pool of individuals eligible for appointment to the Board.

The proposed changes are expected to support the Canadian payments ecosystem by providing Payments Canada with greater flexibility to recruit independent directors who possess recent and relevant experience, while continuing to uphold strong independence requirements.

The proposed change to allow individuals who are directors, senior officers, or employees of entities that are eligible for membership in Payments Canada, but are not members, to serve as independent directors would expand the pool of qualified applicants by removing what is currently a broad automatic exclusion of representatives from any eligible entity, regardless of membership status. This change would enhance Payments Canada’s ability to recruit individuals with payments knowledge and experience and could also increase the diversity of the independent directors on the Board. Importantly, the continued prohibition on individuals affiliated with entities that are majority-owned or controlled by members helps ensure that nominees for independent director positions will continue to meet an objective standard of independence.

The proposed changes to reduce the cooling-off period are intended to balance two objectives:

  1. ensuring sufficient time has passed since a nominee had a relationship with (1) Payments Canada; (2) a member of Payments Canada; or (3) an affiliate of a member of Payments Canada, so that prior affiliations would not reasonably be expected to impair independent judgment; and
  2. enabling the recruitment of independent directors with recent and relevant industry experience.

A three-year cooling-off period has proven to be a significant barrier, particularly in a rapidly evolving payments landscape, where individuals may quickly become disconnected from emerging trends and issues. A one-year period will provide access to up-to-date expertise. Reducing the cooling-off period could raise questions about the perceived neutrality of an independent director, who would have otherwise been ineligible for appointment. However, this risk is mitigated by Payments Canada’s robust and well-established director nomination process. In addition, the nominating committee is majority-independent to reduce the potential for conflict of interest. Additionally, Payments Canada, under the Regulations, must confirm and report annually on the independence of the directors providing ongoing verification of their independence. Collectively, these safeguards mitigate the risks associated with reducing the cooling-off period.

Small business lens

Analysis under the small business lens concluded that the proposed changes to the Regulations would not impact Canadian businesses.

One-for-one rule

The one-for-one rule does not apply, as there is no incremental change in the administrative burden on business and no regulatory titles are repealed or introduced.

Regulatory cooperation and alignment

These Regulations apply only to the Board of Payments Canada — no regulatory cooperation or alignment with other relevant jurisdictions or international organizations is required.

International obligations

The proposed changes are not connected to any international obligations or trade agreements.

Effects on the environment

In accordance with the Cabinet Directive on Strategic Environmental and Economic Assessment (SEEA Directive), a preliminary scan concluded that a strategic environmental and economic assessment is not required.

Gender-based analysis plus

No gender-based analysis plus (GBA+) impacts have been identified for this proposal.

Rationale

The proposed changes to the Regulations are intended to ensure that any nominee for an independent Board director position does not have a professional, business or personal relationship that could reasonably be expected to interfere with the exercise of independent judgment, while also recognizing the need for Payments Canada to recruit from a broad pool of qualified candidates with recent and relevant expertise. The proposed changes are designed to achieve that balance.

Implementation, compliance and enforcement, and service standards

Implementation

The proposal would come into force upon registration.

Payments Canada would communicate the changes to relevant stakeholders, including entitled members.

Contact

Nicolas Marion
Senior Director
Payments Policy
Financial Services Division
Financial Sector Policy Branch
Department of Finance Canada
90 Elgin Street
Ottawa, Ontario
K1A 0G5
Email: fin.payments-paiements.fin@fin.gc.ca

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council proposes to make the annexed Regulations Amending the Canadian Payments Association Election of Directors Regulations under subsection 35(1)footnote a of the Canadian Payments Act footnote b.

Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. They are strongly encouraged to use the online commenting feature that is available on the Canada Gazette website but if they use email, mail or any other means, the representations should cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to Nicolas Marion, Senior Director, Payments Policy, Financial Services Division, Financial Sector Policy Branch, Department of Finance Canada, 90 Elgin Street, Ottawa, Ontario K1A 0G5 (email: fin.payments-paiements.fin@fin.gc.ca).

Ottawa, September 25, 2025

Janna Rinaldi
Acting Assistant Clerk of the Privy Council

Regulations Amending the Canadian Payments Association Election of Directors Regulations

Amendments

1 Subsection 2(2) of the Canadian Payments Association Election of Directors Regulations footnote 1 is repealed.

2 (1) The portion of subsection 3(1) of the Regulations before paragraph (b) is replaced by the following:

Independent director

3 (1) For the purposes of paragraph 8(1)(d) of the Act, independent means an individual other than

(2) Paragraph 3(1)(c) of the Regulations is replaced by the following:

(3) Paragraphs 3(1)(f) to (i) of the Regulations are replaced by the following:

3 Subsection 5(2) of the Regulations is replaced by the following:

Annual report

(2) The Board must indicate in the report that the nominating committee has confirmed the independence of the directors.

Coming into Force

4 These Regulations come into force on the latest of

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