On July 10, 2013, the Toronto Stock Exchange (TSX) issued a Staff Notice on Director Elections (Notice).  The Notice provides guidance on director election requirements (Requirements) found in sections 461.1 to 461.4 of the TSX Company Manual.  In particular, the Notice provides guidance on:

  • applications from interlisted international issuers applying for a waiver from the Requirements;
  • the application of the Requirements to interlisted international issuers applying to list on the TSX;
  • director recommendation requirements where an amendment is required to the issuer’s articles of incorporation to meet annual election requirements;
  • the disclosure requirements for press releases disclosing director election results;
  • the application of the Requirements where an issuer has appointment or similar rights for its board of directors; and
  • compliance with the policy objectives of the Requirements.

This bulletin summarizes certain aspects of the Notice, which may be of interest to TSX listed issuers.

Summary of the Notice

Waiver Applications by Interlisted International Issuers

The Notice states that the following factors should be addressed by an interlisted international issuer seeking a waiver from the Requirements:

  • the name of the stock exchange or market on which the issuer primarily trades (Home Market);
  • the jurisdiction of incorporation;
  • the level of trading in Canada and the Home Market.  The TSX will be more receptive of a waiver where at least 75% of the value and volume of the issuer’s trading in the six months prior to the date of the application has occurred outside of Canada;
  • if the issuer is incorporated outside of Australia, the United Kingdom or the state of Delaware (or another U.S. state with corporate laws comparable to the state of Delaware) (Known Jurisdictions), a detailed description of: (a) the issuer’s compliance with director election standards of its jurisdiction of incorporation; and (b) the comparative director election practices of similar-sized issuers in its sector in its Home Market;
  • if incorporated in a Known Jurisdiction, confirmation that the issuer is in compliance with director election standards of its jurisdiction of incorporation and Home Market;
  • if incorporated outside of a Known Jurisdiction, a description of the corporate governance regime for director elections in the Home Market; and
  • any other material information in respect of the application.

If a waiver is granted, the relief granted and the reasons for requesting it must be disclosed in the issuer’s annual information circular.  The wavier will be effective for only one year or until the issuer’s next annual general meeting of shareholders.

Application of Requirements to Interlisted International Issuers at the time of Listing

Interlisted international issuers are not required to meet the Requirements at the time of listing.  The Requirements will begin to apply when the issuer mails its meeting materials for its first annual general meeting after listing on the TSX provided that it has been listed for at least 6 months at that time.  For issuers that have been listed for a period of less than 6 months, the Requirements will not come into effect until its next annual general meeting.

Director Recommendation Requirements

In circumstances where a board of directors of an issuer has concluded that recommending amendments to the issuer’s constating documents in order to implement annual elections as contemplated by section 461.1 of the TSX Company Manual would be contrary to the board of directors’ fiduciary duties, then the TSX will consider that an issuer has satisfied this requirement if the board states in its management information circular that such amendment is “as required by the TSX”.  In such circumstances, the TSX has indicated that the circular must provide balanced information about annual elections and the proposed amendment to implement same.

News Release Requirement

The Notice provides that news releases disclosing results of director elections should either (a) disclose the percentages of votes received ‘for’ and ‘withheld’ for each director, (b) the total votes cast by proxy and ballot, together with the number that each director received ‘for’, or (c) the percentages and total number of votes received ‘for’ for each director.  If the vote was conducted by way of a show of hands and no formal count occurred that would meaningfully represent support levels, the TSX expects that the disclosure at least reflect the votes represented by proxy that would have been withheld from each nominee had a ballot been called, as a percentage of votes represented at the meeting.


The Notice further demonstrates that the TSX has adopted the Requirements in an attempt to strengthen the Canadian corporate governance regime and to support the integrity and reputation of the Canadian capital markets.