On October 15, 2014, the securities regulatory authorities of Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Québec and Saskatchewan (the “participating jurisdictions”) announced the final amendments to National Instrument 58-101 Disclosure of Corporate Governance Practices and Form 58-101F1 Corporate Governance Disclosure (the “Final Rule”). Provided that all necessary ministerial approvals are obtained, the Final Rule will come into effect on December 31, 2014, in time for the 2015 proxy season. The securities commissions in Alberta and British Columbia have not participated in the Final Rule.
As expected, the Final Rule implements a “comply or explain” disclosure model regarding director term limits and the representation of women on boards and in executive officer positions and does not introduce any mandatory quotas or targets (adopted by some foreign jurisdictions). The Final Rule will require TSX-listed and other non-venture issuers to annually disclose in their proxy circular or annual information form (or provide an explanation for the absence of) the following:
- director term limits or other mechanisms of board renewal;
- written policies regarding the representation of women on the board;
- the board’s or nominating committee’s consideration of the representation of women in the director identification and selection process;
- the issuer’s consideration of the representation of women in executive officer positions when making 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 board and in executive officer positions.
The Final Rule is substantially the same as the amendments initially published for comment by the Ontario Securities Commission in January 2014 and by the securities regulatory authorities of the other participating jurisdictions in July 2014, subject to the following principal modifications:
- The Final Rule requires issuers to disclose not only whether or not they have adopted term limits, but also whether they have adopted other mechanisms for board renewal, and, if so, to include a description of those limits or other mechanisms. This change takes into account the diversity of means by which boards encourage renewal.
- The Final Rule requires disclosure only of written policies regarding the representation of women on the board; informal or unwritten policies are not required to be disclosed.
- The Final Rule clarifies that if issuers have voluntarily adopted targets regarding the representation of women on the board and in executive officer positions, they must disclose not only that they have done so but also the target adopted.
- The Final Rule requires disclosure of the number and proportion of women in executive officer positions within an issuer and its major subsidiaries, rather than allof its subsidiaries.