Securities regulators across Canada (non-participating jurisdictions  include Alberta, Prince Edward Island and British Columbia) have adopted new disclosure requirements targeting board policies for renewal and gender diversity that will have implications for the upcoming proxy season. The new requirements, effective as of December  31,  2014,  have  the  stated  purpose of increasing transparency for investors and other stakeholders regarding the representation of women on boards and in senior management of non-venture issuers. This transparency is intended to assist investors when making investment and voting decisions.

Non-venture issuers  in  participating  jurisdictions  will now need to provide disclosure of the following annually in their management information circular and/or annual information form:

  1. director term limits and other mechanisms of board renewal;
  2. policies regarding the representation of women on the board;
  3. the board’s or nominating committee’s consideration of the representation of women in the director identification and selection process;
  4. the issuer’s consideration of the representation of women in executive officer positions when making executive officer appointments;
  5. targets regarding the representation of women on the board and in executive officer positions; and
  6. the number of women on the board and in executive officer positions.

The amendments do not impose a requirement for issuers to have a specified quota of women in executive officer positions or on boards. Instead, the amendments follow a “comply or explain” approach whereby an issuer would need to confirm that it has a policy regarding the specific disclosure requirement (such as term limits for directors) and provide disclosure regarding the policy. If the issuer has no such policy in place, it must explain why it does not and disclose potential risks associated with not having such a policy in place. According to the Ontario Securities Commission, the “comply or explain” approach is consistent with existing corporate governance disclosure requirements and will allow issuers to determine how gender diversity and board renewal will be addressed in light of the issuer’s unique circumstances. However, many commentators have questioned whether these disclosure requirements will bring about any meaningful change.

For the background of the consultation process undertaken in connection with the new board renewal and diversity requirements, please see Aird & Berlis LLP’s August 2013 Securities Law Bulletin.

The full CSA Notice of amendments to National Instrument 58-101 can be found here.

Daniel Everall is an articling student at Aird & Berlis LLP.