The Ontario Securities Commission (the OSC) recently released its 2012 annual report (the Annual Report), which includes a further update (see our July 2012 Blakes Bulletin: OSC to “Advocate” for Director Election Reforms) on the OSC’s intentions concerning potential reforms to the regulation of director elections.


In January 2011, the OSC published OSC Staff Notice 54-701 – Regulatory Developments Regarding Shareholder Democracy Issues, which stated they were assessing whether reforms to securities laws were appropriate to facilitate individual director voting and majority voting for director elections of reporting issuers in Ontario.

In September 2011, the Toronto Stock Exchange (TSX) published for comment proposed changes to its Company Manual (the TSX Proposal) which would require TSX-listed issuers to elect directors individually (rather than by slate) and make specified disclosures concerning majority voting for the election of directors. The TSX Proposal also requested feedback on whether disclosure of voting results of shareholders meetings (even if the vote was done by a show of hands rather than by ballot) should be mandated by the TSX. See our September 2011 Blakes Bulletin: TSX Proposes Reforms for Director Elections.

OSC Support of TSX Proposal

Noting that the scope of shareholder voting rights and how they can be exercised has a significant impact on confidence in the capital markets, the Annual Report discloses that the OSC is considering specific policy initiatives that would strengthen the role of shareholders in uncontested director elections. In particular, the Annual Report indicates that the OSC supports the TSX Proposal, noting that the TSX Proposal will provide greater transparency to shareholder meetings and increased accountability of directors to shareholders.

The TSX Proposal contains a “comply or explain” disclosure-based regime with respect to majority voting for the election of directors. Noting that the OSC considers the process by which directors are elected, even when unopposed, as a significant governance issue that supports the legitimacy and accountability of boards of directors, the Annual Report discloses that the OSC and the TSX are discussing what further steps need to be taken to ensure that all TSX-listed issuers adopt majority-voting policies within a reasonable time-frame.

Although a specific timeline is not provided, the Annual Report provides further insight on the OSC’s intentions concerning potential reforms to the regulation of director elections and increases the pressure for, at least, TSX-listed issuers to consider adopting individual director voting and majority-voting policies.