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
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
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