The securities regulators in 7 provinces and 2 territories announced on Wednesday, October 15, 2014, that the final version of the amendments to National Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101) and Form 58-101F1 Corporate Governance Disclosure (Form 58-101F1) would include stringent requirements pertaining to female representation on boards and in executive officer positions. Securities regulators in Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Quebec and Saskatchewan have all signed on to the long-awaited amendments.

Disclosure Requirements

The enhanced disclosure requirements pertaining to females on boards, while significant, do not go so far as mandating quotas, as seen in parts of Europe. The amendments will instead require all TSX-listed issuers to disclose, either in their proxy circular or annual information form, the following: any director term limits and board renewal policies, policies pertaining to female representation on the board, details on how the board or nominating committee considers the representation of women in the director identification and selection process, the issuer’s consideration of female representation when appointing executive officers, any targets the issuer may have for female directors and executive officers, and the number of women on the issuer’s board and in executive officer positions.

While the amendments require increased disclosure, some may question their effectiveness, as they do not include disclosure deadlines or penalties should a company fail to make the required disclosure.

The amendments are the result of an Ontario-led effort to increase the accountability of TSX-listed companies to shareholders on the long standing issue of the under-representation of women on boards. The Ontario Securities Commission initially released a proposal on the issue in July 2013, followed by formal proposed amendments to NI 58-101 and Form 58-101F1 in January 2014. With the majority of the provincial securities regulators supporting the amendments, the changes will come into effect across most of the country on December 31, 2014.

2015 Proxy Season

These amendments are sure to have an impact on the 2015 proxy season. The issue of female representation on boards is not new to investors. Indeed, there is evidence to suggest that more women on the board and in senior management positions will have a positive impact on a corporation’s financial performance and corporate culture. It is no surprise then that shareholders and proxy advisory firms have been advocating for improved female representation for both board and executive officer positions, it’s just good business.

With mounting data on the issue, it’s possible that investors will place increased pressure on TSX-listed issuers to comply with the new requirements in this upcoming proxy season. Female representation on boards varies depending on the industry, with the mining industry having a particularly poor record. That industry is also known for having an active shareholder base, and whether they will make demands for more female board members will be something to look for in 2015. While the amendments to the securities laws may lack a formal enforcement mechanism, it will be interesting to observe the extent to which investors demand disclosure and hold corporations accountable come proxy season.