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The updated website offers the critical guidance on the Supply Chains Act that came into force on January 1st 2024. It also introduced a new method for submitting the report by way of a detailed questionnaire, which may add a new dimension to the compliance process with the Supply Chains Act. Companies are advised to thoroughly review both the guidance and the questionnaire on the website prior to filing their reports. This proactive approach will help ensure that their reports and compliance strategies are in line with the expectations of Public Safety Canada, which is the overseeing regulatory body.
While the website provides comprehensive detail interpreting the Supply Chains Act and adhering to its requirements, our focus will be on highlighting key aspects of the guidance. This is particularly relevant for our clients who operate across diverse sectors and industries, to aid in the understanding of the most significant elements of the implementation and compliance requirements of the Supply Chains Act.
On the website, there is a section titled “Prepare a report - Entities” (Guidance Section), which offers the initial guidance from Public Safety Canada on the Supply Chains Act. This section elaborates on how Public Safety Canada interprets the scope of Supply Chains Act and outlines the specific information that is to be included in the reports prepared in order to be compliant.
As outlined in our Legal Insight The regulatory and legal implications of Canada’s Modern Slavery Act, reporting under the Supply Chains Act applies broadly to certain entities and government institutions that
The Guidance Section of the Public Safety Canada website elaborates on the interpretation of the above criteria under the Supply Chains Act providing some context to several terms used throughout the nomenclature:
These interpretations aim to clarify the applicability and scope of the Supply Chains Act, providing entities with a better understanding of the compliance requirements.
The Guidance Section of the website does provide details on how to determine whether an organization is an entity and subject to reporting obligations under the Supply Chains Act. The term “entity” is defined in the Supply Chains Act as any organization that is listed on a Canadian stock exchange, or an organization that has a connection to Canada (defined as having a place of business in Canada, doing business in Canada, or having assets in Canada) and also meets at least two of the following three conditions for a minimum of one of its two most recent financial years:
The Guidance Section provides insights into how the applicability test of the Supply Chains Act should be interpreted, including several key points:
Despite these clarifications, some aspects remain uncertain. For instance, businesses might interpret terms in their "ordinary sense" differently, leading to varied conclusions. It is also not clear whether the internal import or distribution of goods within an organization falls under the scope of the Supply Chain Act. Furthermore, the requirement for entities incorporated under the Canada Business Corporations Act to present their reports to shareholders alongside annual financial statements is yet to be fully elucidated. This leaves businesses with the task of navigating these ambiguities and making their own determinations about the applicability of the Supply Chain Act to their operations.
The Guidance Section provides specific recommendations on the composition of reports in compliance with the Supply Chains Act, detailing both format and content. Key elements include:
Additionally, the Guidance Section elaborates on responding to the seven specific reporting requirements as outlined in subsection 11(3) of the Supply Chains Act. It's crucial to note that beyond these guidelines, the preparation of the report is significantly influenced by the new questionnaire introduced by Public Safety Canada as detailed in the following section.
The recent update on the website about the Supply Chains Act revealed the introduction of a mandatory questionnaire (Questionnaire) necessary for report submission to the Minister of Public Safety. This Questionnaire adds a new layer to the reporting responsibilities for entities under the Supply Chains Act and includes both mandatory and optional questions.
Key elements of the questionnaire include:
This unique implementation by Public Safety Canada underlines the importance for businesses to carefully consider and adapt their compliance strategies to align with the specific demands of the Supply Chains Act, particularly when operating across different international reporting frameworks.
The comprehensive nature of the Supply Chains Act, along with its broad applicability to a diverse range of businesses, is well-addressed on Public Safety Canada’s website, which offers valuable insights into its approach to enforcing the Supply Chains Act. For businesses tasked with submitting reports under the Supply Chains Act, it is crucial to thoroughly review the website, with special focus on the Guidance Section and the Questionnaire. Integrating this information into their compliance strategies is key to effectively meeting their obligations under the Supply Chains Act.
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