TSX-listed companies will almost certainly need to include disclosure in their information circulars or annual information forms on the representation of women on their boards and in senior management for the 2015 proxy season.
On October 15, 2014, the securities regulatory authorities in a number of Canadian jurisdictions announced final amendments to National Instrument 58-101 Disclosure of Corporate Governance Practices and Form 58-101F1 Corporate Governance Disclosure (the Rule Amendments). Participating jurisdictions include Ontario and Quebéc. Notable by their absence were Alberta and British Columbia.
The Rule Amendments
The Rule Amendments require TSX-listed issuers to include annual disclosure in their management information circular or annual information form on the following matters:
- director term limits or other board renewal mechanisms;
- any written policy regarding the representation of women on the board (and, if the issuer has a policy, a summary of it and disclosure of implementation, achievement of objectives and measurement);
- consideration of the level of representation of women in the director identification and selection process;
- consideration of the level of representation of women in executive officer appointments;
- any targets voluntarily adopted regarding the representation of women on the board and in executive officer positions; and
- the number and proportion of women on the issuer's board and in executive officer positions with the issuer and its major subsidiaries.
If the issuer has not implemented the policies and practices listed above, it must instead disclose why it has not done so. This "comply or explain" requirement is consistent with the approach for other corporate governance disclosure.
The Rule Amendments are intended to increase transparency for investors and other stakeholders regarding the representation of women on boards and in senior management. While the disclosure of director term limits or other board renewal mechanisms may not appear to directly support this objective, the participating jurisdictions noted that regular renewal of board membership can provide opportunities for qualified candidates, including those who are women.
The Rule Amendments are expected to come into effect on December 31, 2014, in time for the 2015 proxy season.
Certain Jurisdictions Not Participating
Alberta and British Columbia (plus two other smaller jurisdictions), are not participating in the Rule Amendments. However, companies based in those jurisdictions are still subject to the new disclosure requirements if they are listed on the TSX.
The Alberta Securities Commission (ASC) published ASC Notice 58-701 ASC Response to Gender Diversity Proposal on July 3, 2014, in response to the proposed amendments first published for comment by the Ontario Securities Commission on January 16, 2014 (the OSC Proposal). The ASC stated that while the OSC Proposal reflected the objective of increasing the participation of women on boards and in executive officer positions with TSX-listed issuers, the ASC was not persuaded that this objective fell within its mandate as a securities regulator to protect investors and foster a fair and efficient capital market in Alberta.
As the Rule Amendments are expect to come into effect on December 31, 2014, TSX-listed issuers should consider the implications of the increased disclosure requirements to them, as well as the costs of implementing policies and practices to comply with the additional requirements or explaining why such policies and practices are not in place.