Operating Rules

Office of the Grocery Sector Code of Conduct (OGSCC) – Operating Rules

Background to Grocery Sector Code of Conduct

On November 27, 2020, the Agriculture Ministers discussed the concerns of processors, producers, and independent grocersregarding increased retailer fees on suppliers and the need for balance in the supplier-retailer relationship, while also ensuring that Canadians continue to have access to a reliable grocery supply at affordable prices. Federal, Provincial, and Territorial (FPT) governments agreed that collaborative action wasthe best approach.

In July 2021, FPT Ministers called for an industry-led process to develop broad consensus around a concrete Code proposal to improve transparency, predictability, and respect for the principles of fair dealing within the supplier/retailer relationship.

Following the July 2021 announcement, a Steering Committee comprised of individuals from ten key stakeholder associations was convened with the goal of developing terms of reference and a work plan aimed at facilitating the development of a formal Grocery Sector Code of Conduct. The Code of Conduct is not a singular document. It is a set of integrated measures including: (a) principles, (b) trade rule provisions supported by clear definitions, (c) a dispute resolution mechanism, (e) mediation and arbitration models, and (f) enforcement mechanisms, which work together to promote fair and ethical trading and contractual certainty.

I. INTERPRETATION

(a) Terms used herein and not otherwise defined shall have the meaning given to such  terms in the Articles or By-Laws. Where terms are not defined in the Articles or By-Laws, they shall have the meaning given to such terms in the Act. Terms defined herein shall have the meanings given to them herein. 

(b) In addition, the following terms shall have the following meanings:

“Annual Sales” shall have the meaning determined by the Board from time to time and shall, unless  otherwise determined by the Board, include the annual sales of any Affiliates of a Member. 

“Grocery Products” shall have the meaning set out in the Code and can only be amended by amending the  Code. 

“DRMP” shall have the meaning set out in the Code and can only be amended by amending the Code.

“Independent Retailer” means [*]. 

“Large Manufacturer/Supplier” means [*]. 

“Non-Affiliated Wholesaler/Distributor” means [*]. 

“Primary Producer” means [*]. 

“Retailer” shall have the meaning set out in the Code and can only be amended by amending the Code. 

“SME Manufacturer/Supplier” means [*]. 

(c) Pending a French translation of these Operating Rules being approved by the Board in  accordance with the requirements herein, the English version of these Operating Rules shall be  paramount in the event of any discrepancy or inconsistency between the English and French  versions of these Operating Rules. On approval of the French translation of these Operating  Rules by the Board, the English and French versions shall be equally valid and neither shall be  paramount.

II. ROLE OF THE BOARD

The role of the Board is strategic in nature, with a focus on governance, policy and high-level  strategic decisions. The Board is not an operational board and all operational decisions will be  delegated to the President and Adjudicator when he/she are retained. Each Director has a  fiduciary duty to the Corporation, which requires them to act honestly and in good faith with a  view to the best interests of the Corporation in respect of all matters involving the Corporation  and before the Board. The Board shall ensure that the purposes of the Corporation, as well as  the objectives and principles of the Code, as modified from time to time, are upheld.

III. PRESIDENT & ADJUDICATOR

The President & Adjudicator is the most senior employee of the Corporation and shall be the chief  executive officer of the Corporation. In general, the President & Adjudicator shall direct and  manage all business and affairs of the Corporation. In particular, the President & Adjudicator shall,  subject to his/her employment contract and the direction of the Board: 

(a) supervise the carrying out of the policies and orders of the Board; 

(b) prepare an annual draft budget for the Corporation, for consideration by the  Board; 

(c) be authorized from time to time, and within the budget of the Corporation, to  employ such persons as the President & Adjudicator may deem necessary for  the proper conduct of the affairs of the Corporation, and determine the compensation to be paid therefore; 

(d) do all and every such other things and acts pertaining to the role of President &  Adjudicator, and shall make such reports, recommendations, and suggestions  to the Board as in their judgment will be for the benefit of the business of the  Corporation; and 

(e) be the public face of the Corporation, and proactively communicate with  members, governments and the general public. 

IV. CRITERIA FOR MEMBERSHIP

(a) For the purposes of Section 2.1(b)(ii) of the By-Laws, to be eligible for Class B membership in the Corporation, the Annual Sales of the applicant must have been  equal to or less than Three Hundred and Fifty Million Dollars ($350,000,000.00) in the  applicant’s fiscal year immediately preceding the application. To maintain Class B  membership in the Corporation in each fiscal year of the Member, the Annual Sales of  the Member must be equal to or less than Three Hundred and Fifty Million Dollars  ($350,000,000.00). 

(b) For the purposes of Section 2.1(b)(iii) of the By-Laws, to be eligible for Class C  membership in the Corporation, the Annual Sales of the applicant must have been  more than Three Hundred and Fifty Million Dollars ($350,000,000.00) in the applicant’s fiscal year immediately preceding the application. To maintain Class C  membership in the Corporation, in each fiscal year of the Member the Annual Sales of  the Member must be more than Three Hundred and Fifty Million Dollars ($350,000,000.00). 

(c) For the purposes of Section 2.1(b)(v) of the By-Laws, to be eligible for Class E  membership in the Corporation, the Annual Sales of the applicant must have been  equal to or less than One Billion Dollars ($1,000,000,000.00) in the applicant’s fiscal  year immediately preceding the application. To maintain Class E membership in the  Corporation, in each fiscal year of the Member the Annual Sales of the Member must be equal to or less than One Billion Dollars ($1,000,000,000.00). 

(d) For the purposes of Section 2.1(b)(vi) of the By-Laws, to be eligible for Class F  Membership in the Corporation, the Annual Sales of the applicant must have been  more than One Billion Dollars ($1,000,000,000.00) in the applicant’s fiscal year  immediately preceding the application. To maintain Class F membership in the  Corporation, in each fiscal year of the Member the Annual Sales of the Member must  be more than One Billion Dollars ($1,000,000,000.00). 

V. APPLICATIONS FOR MEMBERSHIP

(a) Only persons who meet the requirements of the Articles, By-Laws, these Operating  Rules and the Code as to membership shall be admitted as members of the  Corporation. 

(b) Every application for membership shall be in the form determined by the Board  and shall contain such information required by the Board, including further  information about the applicant, and the information supplied on the application and  information that may be required by the Board in order to verify compliance with the  Articles, By-Laws, these Operating Rules and the Code. Applications shall be  submitted to the President & Adjudicator who shall recommend to the Board  whether the applicant should be admitted to membership in the Corporation. 

(c) Every application for Membership shall be signed by the applicant if the  applicant is an individual or sole proprietorship, any general partner of the  applicant if the applicant is a partnership, or a duly authorized signing officer  of the applicant if the applicant is a corporation or company. 

(d) If it is the intention of the Board to refuse an application, the applicant shall be  provided with notice of the refusal in writing and with an opportunity to  respond in writing within 10 days of sending the notice. If no response is  received within 10 days or the response is insufficient, the refusal will become  effective. The Corporation will notify the applicant regarding whether the  applicant will be admitted into membership in the Corporation upon a full  review of the application and related information. 

(e) An applicant’s membership in the Corporation shall commence on the day the  applicant’s application for membership has been approved. 

VI. Eligibility Criteria for Directors

(a) In accordance with section 5.03 b) i) of the by-laws which provide for Class A  members to elect two (2) directors to the Board, Class A members shall elect two  (2) directors to the Board from among the Class A Members.  

(b) In accordance with section 5.03 b) ii) of the by-laws which provide for Class B  members to elect two (2) directors to the Board, Class B members shall elect one (1) director on the board from among the manufacturers/suppliers with Annual  Sales equal to or less than $50 million, and one (1) director to the Board from  among the manufacturers/suppliers with Annual Sales between $50 million and  $350 million.  

(c) In accordance with section 5.03 b) iii) of the by-laws which provide for Class C  members to elect two (2) directors to the Board, Class C members shall elect two  (2) directors to the Board from among the manufacturers/suppliers with Annual  Sales over Three Hundred and Fifty Million Dollars ($350,000,000.00). 

(d) In accordance with section 5.03 b) iv) of the by-laws which provide for Class D  members to elect one (1) director to the Board, Class D members shall elect one  director to the Board from among the Class D Members.  

(e) In accordance with section 5.03 b) v) of the by-laws which provide for Class E  members to elect two (2) directors to the Board, Class E members shall elect two  (2) directors to the Board from among the Independent Retailers with Annual  Sales equal to or less than One Billion Dollars ($1,000,000,000.000). 

(f) In accordance with section 5.03 b) vi) of the by-laws which provide for Class F  members to elect three (3) directors to the Board, Class F members shall elect  three (3) directors to the Board from among the Retailers with Annual Sales of  more than One Billion Dollars ($1,000,000,000.000).

VII. Grocery Sector Code of Conduct

A. Operating Principles of the Corporation regarding the Application of Grocery Sector Code of Conduct 

The operating principles of the Corporation when it comes to the application of the Code  are: 

(a) Objectivity: Objectivity and procedural fairness will guide the Corporation in all its actions. The GCAO will start from the assumption that no member wants or intends to work in contravention of the Code. 

(b) Efficiency: The Code exists to support business and to increase the  efficiency and effectiveness of the grocery sector. The industry is fast-moving, so speed in achieving Code compliance and issue resolution is essential. 

(c) Pro-active: Pro-actively identifying thematic issues and clarifying their  status under the Code. 

(d) Light touch: Retailers and suppliers are readily capable ofsolving issues  themselves if the Code is clear and they understand it. By highlighting  and encouraging good practices and discouraging poor practices, the President & Adjudicator will help drive positive behavior change. 

B. Role of the Corporation when it comesto the Grocery Sector Code of Conduct  The role of the Corporation when it comes to the Code are: 

(a) training & education of Members; 

(b) reporting & accountability to Members; 

(c) managing the dispute resolution process between Members. 

(d) review of issues and ensuring compliance through various tools (including members’ discipline and corrective measures); and 

(e) maintaining a Code that is responsive and relevant to current industry  trends. 

C. Commercial Relationships Covered by the Code 

The following commercial relationships are covered by the Code: 

(a) Class A Members selling Grocery Products to Class D Members, Class E  Members and/or Class F Members.

(b) Class B Members and Class C Members selling Grocery Products to Class D  Members, Class E Members and/or Class F Members. 

(c) Class D Members selling Grocery Products to Class E Members and Class F  Members. 

(d) Class F Members selling Grocery Products to Class E Members. D. Dispute Resolution Process

D. Dispute Resolution Process 

The First Board will direct the President & Adjudicator to develop of fulsome DRMP for use in respect of matters governed by the Code, for approval by the Board. The DRMP will be  based on the following principles:

VIII. COMMITTEES AND ADVISORY GROUPS

A. Committees 

(a) As set out in the By-Laws, the Board may establish such committees as it deems  appropriate with such goals and terms of reference as it deems appropriate. If  the Board does not establish terms of reference for any committee, the  committee may approve its own terms of reference, subject to the fact that any  such terms of reference are subject to approval by the Board.

(b) The Board shall be entitled to admit and remove members of committees and  fill vacancies that occur in a committee from time to time. Committee  members shall remain in office until the Annual Meeting following their  appointment or as otherwise determined by the Board. 

(c) Committees have no independent authority, shall not speak on behalf of the  Corporation, cannot bind the Corporation in any way and report to the Board. 

B. Nominations Committee 

Not less than thirty (30) days following the Annual Meeting of the Corporation, the  Board shall appoint a nominations committee, the members of which shall hold office  for a term of one (1) year from the date of their appointment, or until their successors  are appointed. The nominations committee shall be comprised of six (6) current  Directors of the Corporation whose terms are not up for re-election or where their term  is up, they have chosen not to run for re-election at that time. The make-up of  nomination committee shall be comprised of a minimum of six (6) individuals, one from  each class of membership. The committee will select its own chair. The primary task of  the nominations committee shall be to recruit and secure strong balanced leadership for  the Corporation in accordance with the composition of the Board established in By-Law  No. 1. In particular, the nominations committee will: 

(a) prepare a nominations committee report which shall include a slate of one or  more candidates for each Director’s office which will be vacant and for which  an election is to be held at the Annual Meeting, the slate to be determined in  accordance with the OGSCC Nominations and Director Selection Process attached as Appendix A to these Operating Rules; and 

(b) provide its report to the Board for its consideration at least sixty (60) days  before the Annual Meeting each year. 

(c) present the nominations committee report to the Members at the Annual  Meeting; 

(d) make recommendationsto the Board regarding nomineesfor the appointment  of Officers on an annual basis; 

(e) make recommendations to the Board regarding nominees to fill vacancies on  the Board, in Officer’s positions or on committees that occur throughout the  year. 

C. Grocery Code Advisory Group and Process to Change the Code 

The President & Adjudicator shall suggest potential members for the Board to appoint  to the Grocery Code Advisory Group (the “Advisory Group”). The Grocery Code  Advisory Group shall be comprised of a minimum of six (6) persons representing all membership classes. The President & Adjudicator will be the chair of the Advisory  Group. 

Each year the Grocery Code Advisory Group shall meet to consider whether any  amendments to the Code are necessary or desirable and, as part of this process, shall  review the annual member wide survey report in respect of the Code regarding  behaviors, issues, and opportunities experienced in the previous year. The Grocery  Code Advisory Group may or may not recommend changes to the Code, depending on the review set out above. Any changes to the Code recommended by the Grocery  Code Advisory Group shall require the unanimous approval of all members of the Grocery  Code Advisory Group. If the Grocery Code Advisory Group recommends changes to the Code,such changesshall be submitted to the Board and Membersfor approval as set out  in the By-Laws. 

D. Finance and Audit Committee 

The Board may appoint a Finance and Audit Committee to assist the Board in discharging  its oversight responsibilities for internal control, financial accounting and reporting  practices, the external audit process and material risk management processes. The  committee shall consist of a minimum of four (4) to a maximum of six (6) Directors. The  chairperson of the Committee shall be appointed by the Board on an annual basis and  may be removed by the Board in its discretion. 

E. Governance Committee 

The Board may appoint a Governance Committee to ensure that there is a robust and  effective processfor evaluating the performance of the Board, committees and advisory  groups to ensure that the organization fulfills its legal, ethical, and functional  responsibilities. The committee shall consist of a minimum of four (4) to a maximum of  six (6) Directors. The chairperson of the Governance Committee shall be appointed by  the Board on an annual basis. 

F. Remuneration of Committee Members 

Committee members will serve as such without remuneration, but shall be entitled to  be reimbursed for reasonable expenses incurred in the exercise of their duties provided  such expenses are pre-approved by the Chair or the President & Adjudicator.

IX. AMENDMENTS TO THE OPERATING RULES

Unanimous approval of the First Board is required to approve the inaugural version and modify the  Operating Rules prior to the election of the First Elected Board. Following the election of the First  Elected Board these Operating Rules shall only be amended by the Board by Special Director Vote.

APPENDIX A: OGSCC Nominations and Director Selection Process 

A. Goal 

To increase the pool of qualified Director candidates and to provide transparent process  for Director selection. 

B. Overview 

At least one hundred and twenty (120) days prior to Annual Meeting, the Nominations  Committee will post and circulate to the Members a call for nominations to the Board.  The Nominations committee shall identify the key attributes required on the Board at  that time and include or attach this information to the call for nominations to the Board. 

The nominations committee shall select candidates based on Director having at least  some of the attributes outlined in the Director Competency Matrix below and based on  the direction of the Board in respect of such nomination year, if any. 

Based on qualifications and balancing the Board membership, the Nominations  committee will present its report to the Board at least sixty (60) days prior to the  Annual Meeting for consideration. The final slate of nominations determined by the  Board will be presented to the Members for a vote at the Annual Meeting. 

C. Director Attributes 

The nominations committee will seek candidates who bear some of the attributes  outlined in the Director Competency Matrix which are in addition to the mandatory  Qualifications for Directors set out in the By-Laws.

Director Competency Matrix
Core Board Knowledge, Skills and Experience
CEO / Enterprise Leadership
Industry Sector / Value Chain Representation
Governance / Board
Financial
Desired Knowledge, Skills and Experience
Accounting / Audit
Advocacy / Communications
Development / Fundraising
Diversity
Geography
Government / Public Sector Relations
HR / Performance Management, Compensation
IT / E-Commerce / Privacy Management
Legal / Regulatory
Marketing / Sales
Member Relations
Risk and Control
Operational / Organization Activities
Resource / Project Management
Strategic Planning