On October 15, 2014, the securities regulatory authorities of Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Quebec and Saskatchewan (participating jurisdictions) finalized amendments to National Instrument 58-101 Disclosure of Corporate Governance Practices and Form 58-101F1 Corporate Governance Disclosure, requiring disclosure relating to gender diversity on boards and in senior management and director tenure.
These amendments require issuers – other than venture issuers – in the participating jurisdictions to disclose their policies regarding, and their consideration of, the levels of representation of women on boards and in senior management, and their actual and any targeted figures for such representation.
The amendments also require such issuers to disclose whether they have implemented director term limits or renewal mechanisms and if not to explain why.
The amendments are proposed to come into effect on December 31, 2014, in time for the 2015 proxy season, impacting the disclosure that affected issuers will be required to include in their 2015 annual proxy circulars and/or annual information forms.
The securities regulatory authorities of the provinces of British Columbia, Alberta and Prince Edward Island did not adopt the amendments. The Alberta Securities Commission has stated that it does not believe it has the mandate to require “comply or explain” measures aimed at increasing gender diversity on boards.
For information regarding the development of the amendments, please see our January 2014 Blakes Bulletin: OSC Proposes Disclosure Requirements for Gender Diversity and Director Term Limits and our September 2013Blakes Bulletin: OSC Consultation Paper on Women on Boards and in Senior Management.
The amendments generally follow a “comply or explain” approach, requiring issuers in the participating jurisdictions to provide information regarding their policies, consideration of, and any targets with respect to the representation of women on boards and in executive positions. If an issuer has not adopted any such policy, targets, or considered such representation, it must explain why it has not done so. Issuers may wish to consider adopting gender diversity policies or prepare the disclosure required if they do not, in light of the amendments.
Policies Regarding Representation of Women on Boards
The amendments will require issuers to disclose whether or not they have adopted a policy for the identification and nomination of female directors. If an issuer has adopted such a policy, then it is required to disclose: (i) a short summary of the policy’s objectives and key provisions; (ii) the measures taken to ensure that the policy has been effectively implemented; (iii) annual and cumulative progress by the issuer in achieving the objectives of the policy; and (iv) whether, and if so how, the board or its nominating committee measures the effectiveness of the policy. If an issuer has not adopted such a policy, then it is required to explain why it has not done so.
Consideration of Representation of Women in Director Identification and Selection Process
The amendments will require issuers to disclose whether, and if so how, the board or nominating committee considers the level of representation of women on its board in identifying and nominating candidates for election or re-election to the board and, if they do not, to disclose the reasons for not doing so.
Consideration of Representation of Women in Executive Officer Positions
The amendments will require issuers to disclose whether, and if so how, the issuer considers the level of representation of women in executive officer positions when making executive officer appointments and if they do not, to disclose the reasons for not doing so.
Targets Regarding Representation of Women
The amendments will require issuers to disclose whether they have adopted targets regarding the number or proportion of women on their boards or in executive officer positions and, if they have not, to disclose why they have not done so. If an issuer has adopted such requirements, then it is required to disclose such targets and its annual and cumulative progress in achieving those targets.
Number of Women on Board and in Executive Officer Positions
The amendments will require issuers to disclose the number and proportion of executive officers of the issuer, including all major subsidiaries, who are women, and the number and proportion of directors on the issuer’s board who are women.
Director Term Limits
The amendments will also require issuers to disclose whether or not they have adopted term limits for the directors on their boards or other mechanisms for board renewal and, if they have not, to disclose why they have not done so. In the Ontario Securities Commission’s view, director term limits and other such mechanisms can promote an appropriate level of board renewal and in doing so provide opportunities for qualified board candidates, including those who are women. Accordingly, issuers may also wish to consider their approach to director term limits and other board renewal mechanisms to be able to provide the required disclosure.
APPLICATION AND COMING INTO FORCE
The amendments apply to management information circulars and annual information forms which are filed following an issuer’s financial year ending on or after December 31, 2014. The amendments do not apply to investment funds, designated foreign issuers or U.S. Securities and Exchange Commission foreign issuers, as defined in National Instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers and certain other entities.