Diversity and the equal representation of men and women on corporate boards of directors are of increasing interest to investors, Canadian financial-market regulators and the general population. 

The importance a company affords these matters is considered by many to be a corporate governance issue. Accordingly, more and more governments and financial-market regulators are seeking to encourage or force public companies to increase the number of women directors on their boards, failing which the companies may be compelled to inform their shareholders of or justify the gender disparity. 

In 2011, Quebec innovated in this regard by amending the Act Respecting the Governance of State-owned Enterprises1 such that boards of directors of provincial Crown corporations must be composed of equal numbers of men and women and must  reflect the diverse makeup of Quebec society. 

Since that amendment came into force, the vast majority of boards of directors of Quebec’s Crown corporations have achieved gender parity. The same is not true however of corporations in the private sector. 

A study by Catalyst revealed that in 2013 women occupied only 15.9% of the seats on the boards of directors of the Financial Post 500 corporations and had zero representation on the boards of nearly 40% of them. 

And while Quebec is above the Canadian average in terms of the proportion of women on corporate boards, many consider that to be due to the recently amended legislation on provincial Crown corporations. 

Regulators seek to intervene 

The majority of financial-market regulators now want to ensure that corporations either adopt policies aimed at increasing diversity and the number of women on their boards of directors or, failing that, explain to their investors why they have not done so. 

One of the first securities commissions in Canada to take concrete action in this regard is Ontario’s. In early 2014, the Ontario Securities Commission submitted for comments a draft amendment to its corporate governance rules whereby all reporting issuers listed on the TSX and other reporting non-venture issuers would be required to inform their shareholders of their policy aimed at increasing women’s representation on their boards, or to explain why they do not wish to do so. 

The period for submitting comments has now expired, and the ones received were mainly positive. The few dissenting comments primarily called into question the legitimacy of regulatory intervention in the composition of the boards of directors of public companies. 

The Ontario Securities Commission is expected to adopt the amendments in late 2014. However, no sanction is provided for non-compliance with the new rules. 

Last July, the securities regulatory authorities in Saskatchewan, Manitoba, Quebec, New Brunswick, Newfoundland & Labrador, the Northwest Territories and Nunavut followed Ontario’s lead and published a draft amendment to Regulation 58-101 on information concerning corporate governance practices. 

Those authorities are also seeking input from industry stakeholders. However, the securities authorities in British Columbia, Alberta and Prince Edward Island have not yet shown any inclination to adopt such new rules. 

At the federal level, the Minister of Labour and Minister of Status of Women, K. Kellie Leitch, last June presented the report of the Advisory Council for Promoting Women on Boards. Entitled “Good for Business: A Plan to Promote the Participation of More Women on Canadian Boards”, the report canvasses best practices in Canada and around the world and establishes goals and makes recommendations to the Government of Canada. 

Those recommendations include the following: 

  • a national goal of 30% gender balance by 2019;
  • ensuring greater participation in the recruitment of women to leadership positions and appointments by cabinet decree;
  • instituting a “comply or explain” approach for publicly traded companies;
  • promoting gender balance through policies, human resources practices, board nomination committees, etc. 

Europe leads by example 

Europe, which is in the avant-garde in this respect, continues to promote equal participation of women and men in the corporate decision-making process. In 2012 the European Commission adopted a directive aimed at bringing the proportion of women on the boards of publicly traded companies to 40% by 2020. 

A year later the European Parliament debated this issue and subsequently adopted the European Commission’s proposal.

This article first appeared in French on the blog Conseiller.ca.