CNSC Directive on Reporting and Managing Financial Conflicts of Interest

1.0 Effective Date

This Directive takes effect on March 1, 2025.

2.0 Application

This directive applies to all CNSC employees. Together with the requirements set out in the Nuclear Safety and Control Act, the Values and Ethics Code for the Public Sector, the CNSC Values and Ethics Code, and the CNSC Conflict of Interest Policy, it forms part of the conditions of employment with the CNSC.

3.0 Objective and Expected Results

The objective of this directive is to facilitate the implementation of the Policy regarding employees’ responsibilities to identify, report, and resolve conflicts arising from private assets and liabilities with procedures and measures to effectively report and manage financial conflicts of interest.

The expected results of this directive are that:

• the CNSC has the appropriate mechanisms in place to assist employees to report and effectively manage real, apparent or potential conflicts of interest that arise with respect to employees’ assets and liabilities and the performance of their duties and responsibilities;
• employees take appropriate action to avoid, reduce or manage real, potential or apparent conflicts of interest arising from their assets and liabilities in the performance of their duties and responsibilities.

4.0 Financial interests

Conflicts of interest arising from an employee’s assets and liabilities do not require that the employee anticipate or receive an economic benefit. The existence of the asset or liability in the context of the employee’s official duties and responsibilities can give rise to the conflict.

4.1 Exempt assets and liabilities

Assets for the private use of employees and their family members, as well as assets that are not of a commercial character, are exempt assets that are not required to be disclosed in the Declaration of Conflicts of Interest.

Exempt assets and liabilities would normally include the following:

• residences, recreational properties and farms
• household goods and personal effects
• automobiles and other personal means of transportation
• cash and deposits other than foreign currencies held for speculative purposes
• investments in limited partnerships that are not traded publicly and whose assets are not related to nuclear energy products or any association with routine duties of the employee
• Tax-free Free Savings Accounts (TFSA), Registered Retirement Savings Plans (RRSP) and Registered Education Saving Plans (RESP) in trust that are not self-administered or self-directed
• investments in mutual funds
• Guaranteed Investment Certificates (GIC) and similar fixed value financial instruments
• annuities and life insurance policies
• pension rights
• public sector debt financing, such as university and hospital debt financing, which is not guaranteed by a level of government
• money owed by a previous employer, client or partnership
• personal loans receivable from members of employees’ immediate families and small personal loans receivable from other persons where employees have loaned the moneys receivable

4.2 Reportable assets and liabilities

Some assets and liabilities create a real, apparent or potential conflict of interest. These may arise from prohibited sources and must be disclosed in the Declaration of Conflicts of Interest.

A prohibited source is a person or entity seeking official action (e.g., permission or a transaction) from the CNSC, doing business or seeking to do business with the CNSC, conducting activities regulated by the CNSC, or having interests that may be substantially affected by the performance or non-performance of a CNSC employee’s official duties.

Employees must refrain from investing in private-sector entities or publicly traded companies or from self-directing or self-managing securities of publicly traded companies that are licensed by the CNSC or that are substantially involved in nuclear products or services or companies that are involved in uranium exploration. This is to prevent any employee from taking advantage of information that is not available to the general public or to eliminate any public perception of use of insider information. Further, employees must refrain from selling or transferring assets to anyone, including family members, or taking any other measures for the purpose of circumventing the requirements of this Directive

The following are types of reportable assets and liabilities that must be reported by all employees in the Declaration of Conflicts of Interest:

• publicly traded securities of corporations and foreign governments that are mainly involved in the exploration, development, application or use of nuclear products, or services. These types of financial securities are invested through self-administered or self-directed registered retirement savings plans (RRSPs), self-administered or self-directed registered education savings plans (RESPs), exchange traded funds, and tax-free savings accounts (TFSAs), where these securities are held directly
• interests in partnerships, proprietorships, joint ventures, private companies and family businesses, in particular those that own or control shares of companies that conduct business with the CNSC
• property that is used by entities involved in the exploration, development, application or use of nuclear products or services
• commodities directly used in the development, application or use of nuclear products, or futures with respect to such commodities
• nuclear-related assets placed in trust or resulting from an estate of which the employee is a beneficiary
• liabilities to licensees and contractors
• any other assets or direct and contingent liabilities that could give rise to a real, apparent or potential conflict of interest due to the particular nature of the employee’s official duties and responsibilities
• secured or unsecured loans granted to persons that can create a real, apparent or potential conflict of interest

5.0 Roles and Responsibilities

5.1 Employees at all levels

• reporting in writing to the Senior Ethics Advisor any assets, liabilities and interests that could give rise to a real, apparent or potential conflict of interest in relation to their official duties and responsibilities in the Declaration of Conflicts of Interest (i.e., Declaration of Conflicts of Interest – Form I  and Declaration of Conflicts of Interest - Form II)
• refraining from selling or transferring assets to anyone, including family members, for the purpose of circumventing compliance measures with this Directive
• implementing a financial mitigation strategy where the Senior Ethics Advisor determines that any of their reported assets and liabilities would result in a real, apparent or potential conflict of interest in relation to their official duties and responsibilities
• refraining from knowingly taking advantage of or benefiting from information that is obtained in the course of their official duties and responsibilities and that is not available to the public in managing assets and liabilities.

5.2 Internal Audit, Evaluation and Ethics

• ensuring the CNSC’s structure, resources, systems, and controls are in place to ensure that the requirements set out in the directive and the annexes are administered in a timely and accurate manner, in accordance with the appropriate authorities
• ensuring that the Senior Ethics Advisor responsible for the day-to-day application and administration of this directive provides advice and accurate, consistent and timely information to employees regarding reporting and managing conflicts of interest arising from their assets and liabilities as required under this directive, advising staff on reported assets on a case-by-case basis
• reminding employees to review their assets and liabilities on a yearly basis and whenever necessary

6.0 Managing financial conflicts of interest

6.1 Declaration of conflicts of interest

The first stage of identifying and managing conflicts of interest is for employees to declare their reportable assets and liabilities. All employees must submit the Declaration of Conflicts of Interest (i.e., Declaration of Conflicts of Interest – Form I  and Declaration of Conflicts of Interest - Form II)made under the requirements of the Conflict of Interest Policy and this directive.

6.2 Review of the Declaration of Conflicts of Interest

The Senior Ethics Advisor shall review the Declaration of Conflicts of Interests in a timely manner, request further information for the review as needed, and communicate the findings in writing to the employee submitting the report.

6.3 Determination of appropriate measures

If the CNSC, upon review of the report, determines that any of the reported assets and liabilities of an employee result in a real, apparent or potential conflict of interest, the Senior Ethics Advisor and the employee shall discuss the matter in a timely manner to identify and implement appropriate arrangements to manage and resolve the conflict of interest.

Measures range from simple agreements to avoid the conflict of interest, through documents establishing transfers of legal rights relating to assets or setting out more extensive avoidance measures, to full divestment by relinquishment, sale or transfer. Annex 1 provides examples of measures used to manage and resolve conflicts of interest.

The process of determining the appropriate measure, or combination of measures, for a particular conflict of interest shall take into accounts such factors as:

• the CNSC’s institutional risks related to the specific conflict of interest
• the value and types of assets and liabilities involved
• the actual costs to be incurred by implementing the measures, as opposed to the potential that the assets and liabilities represent for a conflict of interest
• the predominance of public interest over private interest

After completing this process, the Director of Internal Audit, Evaluation and Ethics may decide that the potential of all or some of the assets and liabilities reported to represent a conflict of interest is so insignificant that it would be in the public interest to implement no measures with respect to those assets and liabilities.

6.4 Implementing appropriate measures

All measures to be implemented for a particular conflict of interest shall be clearly identified in a written document.

Divestment or any other appropriate measures to be implemented are to be completed or in place within 120 days of the date indicated in the Senior Ethics Advisor’s initial correspondence, or such other appropriate period, as determined by the Senior Ethics Advisor and approved by the Director of Internal Audit, Evaluation and Ethics, of:

• the initial appointment of an employee or return to the CNSC within the framework of the Interchange Canada program or other agreements
• a determination that a real, apparent or potential conflict of interest exists after a major change in the assets, liabilities or official duties and responsibilities of the employee, or any review of an employee’s assets and liabilities

Until the implementation is complete, the CNSC and the employee shall take appropriate interim measures to avoid or prevent the conflict from arising during that time

Examples of measures and their associated requirements are listed in Annex 1.

7.0 Resolution

When there is a disagreement on the appropriate arrangements between the employee and the Senior Ethics Advisor, Director of Internal Audit, Evaluation and Ethics or President, the disagreement will be resolved through the appeal and resolution procedures available to the CNSC and its employees.

8.0 Consequences

An employee who does not comply with the requirements set out in this directive and the Policy may be subject to administrative and disciplinary measures, up to and including termination of employment

9.0 Enquiries

Any questions regarding this directive should be directed to the Office of Value and Ethics.

10.0 Annex 1 Measures to manage financial conflicts of interest

The following sections describe the arrangements available to the CNSC and its employees to eliminate or mitigate real, apparent or potential conflicts of interest arising from the employee’s assets or liabilities. These arrangements mitigate conflict-of-interest risks to varying degrees, through the combination of avoidance and other measures as described. The CNSC will carefully consider the use of combined measures when determining appropriate measures for a particular situation.

The CNSC is responsible for reviewing and approving agreements and selections of trustees and agents before execution of final instruments. All files and documentation are to be safeguarded in accordance with the Privacy Act.

Divestment by sale, transfer or relinquishment

The CNSC may require that employees eliminate any risk of real, potential or apparent conflicts of interest arising from assets or liabilities by divesting their assets or liabilities through sale or transfer to another person at arm’s length, relinquishing the asset or repaying the liability.

• A divestment by sale or transfer to another person must be documented, consist of the employee’s total interests in the asset or liability, and made at arm’s length. The employee is to provide the Senior Ethics Officer, in a timely manner, with copies of documentation verifying the sale or transfer and the identity of the purchaser or transferee.
• Similarly, a divestment by relinquishment or repayment must be documented and consist of the employee’s total interest. The employee is to provide the Senior Ethics Advisor copies of documentation verifying the relinquishment or repayment.

Measures to avoid financial conflicts of interest

Measures may be taken for the employee to avoid or withdraw from activities or situations that would place him or her in a real, potential or apparent conflict of interest with their official duties and responsibilities. The measure should address conflicts that could arise from the employee’s participation in activities that affect their assets and liabilities or their ability to gain non-public knowledge in relation to those assets and liabilities, or the impact that holding such assets would have or appear to have on their objectivity or impartiality in carrying out official responsibilities.

• Any avoidance measure taken should be documented. When necessary for the effectiveness of the measure, the employee must consent to disclose the conflict to persons in the organization who should be made aware of this arrangement for the successful implementation of the measure.
• Measures involving formal information and activity screening mechanisms should be directly administered by personnel within the CNSC who would be in a position to monitor the necessary screening as part of their regular activities.

Blind trusts

A blind trust places assets of an employee in a trust. The trustee is empowered to exercise all of the rights and privileges associated with those assets, including the power to sell, with no direction from or control by the employee that placed the assets in trust. No information is provided to the employee except as required by law or the trust agreement.

• The employee must choose a trustee with care. The trustee must be at an arm’s-length relationship to the employee. The trustee can be an investment company, a trust, a public trustee or an individual, such as a lawyer, who would perform trustee duties in the course of their work.

The terms of the blind trust must provide that:

• The assets placed in the trust are listed on a schedule attached to the instrument or contract establishing the trust, and must include, at a minimum, assets giving rise to a real, apparent or actual conflict of interest.
• The assets placed in trust are registered to the trustee or held and administered by the trustee under civil law, unless they are in a registered retirement savings plan account.
• At their discretion, the trustee can modify the composition of the trust estate or the account.
• The employee shall not have any power of management or control over the trust assets.
• The employee cannot offer or provide advice to the trustee, nor can the employee in any way participate in any decision-making processes of the trustee, except as set out in paragraph (f) or through written notices or advisements permitted under the trust instrument.
• The trustee shall not seek or accept any instruction or advice from the employee concerning the management or the administration of the assets. However, general investment instructions may be included in an additional schedule to the blind trust instrument or contract but only with the prior approval of the CNSC. The instructions may provide for proportions to be invested in various categories of risk but may not be industry-specific. Verbal directives are not permitted.
• The trustee shall not provide information about the trust to the employee, except for information that is required by law to be filed by the employee and periodic reports on the overall value of the trust.
• The term of any trust shall be for as long as the employee is required to comply with this directive and the conflict of interest relating to the assets continues.
• The trustee shall deliver the trust assets to the employee or such other person identified in the agreement when the trust is terminated.
• The trustee shall provide reports to the CNSC on the trust and its operations during the term of the trust as set out in the agreement.

The CNSC must approve the specific blind trust instrument and the trustees, including replacement and additional trustees, under the instrument and take all steps necessary to protect the identity of the employee and the information contained in the file pertaining to the blind trust. All information pertaining to the blind trust is personal information subject to the Privacy Act.

The employee will provide a copy of the executed agreement in a timely manner to the CNSC.

Within 60 days of the anniversary date of the blind trust agreement’s execution or such other date as provided in the agreement, the trustee is to provide the CNSC with an annual report containing such information as is required under the agreement. The employee will not have access to this report, since it will include a reconciliation of the trust property.

Blind management agreements

A blind management agreement places the employee’s assets in a manager’s hands. The manager is empowered to exercise all of the rights and privileges associated with those assets. At all times, the manager is prohibited from contacting the employee and the employee is prohibited from contacting the manager.

The employee must choose their manager with care. The manager must be at arm’s length relationship with the employee.

The terms of the blind management agreement must provide the following:

• The assets to be managed under the agreement shall be listed on a schedule attached to the agreement.
• The employee shall not have any power of management or control over the managed assets.
• The manager shall not seek or accept any instruction or advice from the employee concerning the management of the assets. The employee cannot offer or provide advice, nor participate in any discussion or decision-making processes, wherever they may arise, that may particularly or significantly affect the assets that are subject to the agreement. At all times, the manager is prohibited from contacting the employee, except to obtain basic financial information as approved by the CNSC and such periodic information required for the completion and filing of income tax returns. The employee is prohibited from contacting the manager. However, the employee is entitled throughout the duration of the agreement to be kept informed of the overall value of the assets.
• Despite the previous paragraph, where the manager is of the view that an extraordinary corporate event is likely to materially affect the value of the assets, the agreement may contain provisions that allow for the following:
• The manager is to advise the CNSC of the circumstances. Should the CNSC conclude that the circumstances are of such a nature that they may cause significant undue loss or hardship to the employee, financial information as approved by the CNSC may be provided to the employee;
• In exceptional circumstances only, the employee may personally intervene, but only after the CNSC has determined that the intervention would not give rise to a conflict of interest, and that failure to intervene would cause the employee undue loss or hardship. Any such intervention must occur in the presence of appropriate CNSC official.
• The term of the agreement shall be for as long as the employee is required to comply with the conflict of interest relating to the assets continues.
• The manager shall provide to the CNSC reports on the agreement and the operations conducted under it during the term of the agreement as set out in the agreement.

The employee will provide a copy of the executed agreement to the CNSC in a timely manner.

The CNSC will take all necessary steps to protect the identity of the employee and the information contained in the file on the management agreement. All information pertaining to the blind management agreement is personal information subject to the Privacy Act.

Within 60 days of the anniversary date of the blind management agreement’s execution or such other date stipulated in the agreement, the manager is to provide the CNSC with an annual report containing such information as is required under the agreement. The employee does not have access to the annual report.

Other trusts and management agreements

The employee and the CNSC may determine that another form of trust or management agreement is more appropriate for the particular assets held by the employee and the degree of risk of a conflict of interest arising from them.

The other trust or management agreement shall comply with the requirements provided in this directive for blind trusts or blind management agreements, respectively.

Agency arrangements

In certain circumstances, an agency arrangement may be an appropriate mechanism in the management of a conflict of interest. Agency arrangements, such as powers of attorney or mandate, are legal documents that empower someone to act on behalf of another person. They are governed by the laws of agency in common-law jurisdictions, and mandate in civil-law jurisdictions.

The CNSC must approve the instrument creating the agency arrangement, and the agents under the instrument, prior to its execution.

Asset-freezing arrangements

An asset-freezing arrangement eliminates any direct control by the employee over their assets that give rise to a conflict of interest. This arrangement can take the form of a trust instrument or an agreement between the CNSC and the employee.

• The employee must not take any actions involving the asset during the term of the agreement.
• The employee must obtain, at least once a year, a statement from a person that there has been no activity of the employee in relation to the assets. The person issuing the statement must be at arm’s length to the employee and in a position to know the involvement of the employee in the assets. The employee will provide a copy of the statement to the CNSC in a timely manner as set out in the agreement.

Cost reimbursement

The CNSC may reimburse an employee for reasonable administrative costs, as determined by the CNSC and approved by the Chief Financial Officer, that were incurred by the employee as a result of measures taken under the directive and its annexes to manage a conflict of interest arising from the employee’s reported assets or liabilities.

The administrative costs reimbursable by the CNSC may include:

• where a trust or other agreement with third parties is required under the arrangement:
  • the reasonable legal, accounting and transfer costs to establish and terminate the agreement
  • annual, actual and reasonable costs to maintain and administer the agreement, including the filing of annual tax returns for the trust
• reasonable commissions for transferring, converting or selling assets where determined necessary by the CNSC
• reasonable costs incurred by the employee of other financial, legal or accounting services required because of the complexity of the arrangements for the assets

No reimbursement will be made for:

• charges for day-to-day operations of a business or commercial entity
• charges associated with winding down a business
• costs for acquiring assets using proceeds from the required sale of other assets
• costs related to arrangements not directed or approved by the CNSC
• costs related to conflicts of interest arising from assets or liabilities of the employee acquired after the initial appointment if:
  • the employee knew, or should have reasonably known at the time of acquisition that the asset or liability did, or could, place him or her in a conflict of interest
  • the acquisition was not by devise or legacy, or by receipt of an unsolicited gift
• costs incurred prior to the reporting of the asset or liability
• costs incurred by the employee in completing a report of assets and liabilities to the CNSC as required under the Policy and directive

The employee is responsible for any income tax adjustment that may result from the reimbursement of the administrative costs.

11.0 Annex 2 Prohibited sources

A prohibited source of securities is a person or entity seeking official action (such as permission or a transaction) from the CNSC, doing business or seeking to do business with the CNSC, conducting activities regulated by the CNSC, or having interests that may be substantially affected by the performance or non-performance of a CNSC employee’s official duties.

Prohibited sources include:

• applicants for, or holders of, CNSC licences whose principal activities are in the nuclear field
• entities whose principal activities are to design, manufacture or sell nuclear products or services
• architectural, engineering or other companies whose principal activity is to provide nuclear services or equipment
• entities licensed or regulated by the CNSC whose principal activities are in the production, sale or servicing of industrial medical devices containing nuclear material
• entities that are involved in uranium exploration
• energy or utility sector investment funds with more than 25 percent of their assets invested in securities issued by prohibited sources
• Employees shall consult with the Senior Ethics Officer if the securities in which they plan to invest may conflict with their duties and responsibilities, even if these securities do not come from the above sources.

12.0 Appendix A: Definitions

Conflict of interest: A situation in which employees have private interests that could improperly influence the performance of their official duties and responsibilities or in which they use their office for personal gain. Conflicts of interest may be real, apparent or potential.

Declaration of Conflicts of Interest: Documents to be completed by CNSC employees in the event of a real, apparent or potential conflict of interest. These documents include Declaration of Conflicts of Interest –Form I and Declaration of Conflicts of Interest - Form II)

Directive: The CNSC Directive on Reporting and Managing Financial Conflicts of Interest provides direction and instructions on reportable assets and liabilities.

Employees: Persons employed by the CNSC, appointed to indeterminate or term positions and who work on a full-time or part-time basis.

Family member: Father, mother (or stepfather, stepmother or foster parent), brother, sister, spouse (including common-law spouse resident with the employee), child (including child of common-law spouse), stepchild or ward of the employee, grandparent, grandchild, father-in-law, mother-in-law, and relative permanently residing in the employee’s household or with whom the employee permanently resides.

Investment (direct or indirect): A direct investment is under the employee’s control; for example, buying a stock by name from a company or through a broker or sub-broker. An indirect investment is controlled by entities beyond the employee’s control; for example, buying a mutual fund that has this stock in its portfolio.

Liabilities: Debts or obligations.

Policy: The CNSC’s Conflict of Interest Policy.

President: As an Order-in-Council appointee, the President of the Canadian Nuclear Safety Commission is subject to the Conflict of Interest Act, not to this Policy.

Prohibited source: A person or entity seeking official action (such as permission or a transaction) from the CNSC, doing business or seeking to do business with the CNSC, conducting activities regulated by the CNSC, or having interests that may be substantially affected by the performance or non-performance of a CNSC employee’s official duties.

Reportable activities: Activities outside the CNSC that may put an employee in a conflict of interest; for example, volunteering in companies or associations that have nuclear mandates, giving courses on nuclear energy or the nuclear sector, or selling devices that have nuclear components.

Reportable assets: Benefits, investments, securities or other that may put an employee in a conflict of interest and that they should declare in the Declaration of Conflicts of Interest.

Securities: All interests in debts or equity instruments, including secured and unsecured bonds, debentures, notes, securitized assets and commercial paper, as well as all types of preferred and common stock. The term encompasses current and contingent ownership interests, including any beneficial or legal interest derived from a trust. It extends to any right to acquire or dispose of any long or short position in such securities and includes, without limitation, interests convertible into such securities, as well as options, rights, warrants, puts, calls and straddles with respect thereto.

Senior Ethics Advisor: The officer responsible for the administration of the CNSC’s Values and Ethics Code and its Conflict of Interest, and Internal Disclosure programs.

Stakeholders: Includes CNSC employees, members of the Canadian public, employees of the Government of Canada, CNSC licensees and contractors, and national and international organizations who are involved in the nuclear sector.