The TSX has adopted, and the Ontario Securities Commission has
approved, amendments to the TSX Company Manual aimed at improving
corporate governance standards and disclosure for all TSX listed
issuers. The amendments had first been published for comment in
Summary of Amendments
The amendments, which will come into force on December 31, 2012,
impose five new requirements on all TSX listed issuers:
1. elect directors individually;
2. hold annual elections for all directors;
3. disclose annually in Management Information Circulars:
(a) whether they have adopted a majority voting policy for
directors for uncontested meetings; and
(b) if not, to explain:
(i) their practices for electing directors; and
(ii) why they have not adopted a majority voting policy;
4. advise the TSX if a director receives a majority of
"withhold" votes (if a majority voting policy has not
been adopted; and
5. promptly issue a news release providing detailed disclosure
of the voting results for the election of directors.
The purpose of the amendments is to address the fact that
certain provisions under corporate law are considered to limit
effective corporate democracy. Such provisions include the fact
that issuers in a number of jurisdictions are permitted to adopt a
plurality voting standard for the election of directors rather than
majority voting. In addition, slate voting and staggered terms for
directors are also permitted under the corporate law of a number of
Under a plurality standard securityholders vote "for"
or "withhold" for each director or a slate of directors.
Accordingly, a director may be elected without receiving majority
of favourable votes. The TSX expects all listed issuers and
applicants to be in compliance with the amendments by December 31,
The amendments will not have retroactive effect and will apply
to all securityholder meetings commencing December 31, 2012
(meetings which have already been scheduled and for which proxy
materials have already been approved will be unaffected).
Individual Annual Director Elections As a result of the
amendments, slate voting (pursuant to which shareholders were
allowed to vote for all of the directors nominated by management
(i.e. a slate of directors), but not for individual directors
unless nominated separately), will no longer be permitted.
Accordingly, shareholders will be allowed to cast a ballot for each
As a result of the amendments, each director will be required to
stand for election annually (notwithstanding that an issuer's
constating documents may permit staggered terms). If security
holder approval is required to implement the amendments because
changes are required to the issuers constating documents, the TSX
will not consider issuer to be in breach of these obligations if
the security holders do not approve. However, the issuer is
required to resubmit and recommend the required amendments at an
annual meeting within three years.
The amendments do not mandate the adoption of a majority voting
policy. Rather, the amendments require that an issuer disclose
whether it has adopted a majority voting policy. Under a typical
majority voting policy, plurality voting is permitted, but withhold
votes are considered to be votes against the election of a
candidate. Such a policy generally provides that a director who
receives a majority of withhold votes must tender his or her
resignation and the board would generally accept that resignation,
absent exceptional circumstances.
Majority voting policies may generally be adopted by an
issuer's board of directors, without a need for shareholder
approval or amendment to constating documents. The TSX has
published a new request for comment proposing further amendments
that would require all TSX listed issuers to adopt a majority
voting policy. The comment period for the additional amendments is
open until November 5, 2012 and their adoption is subject to
approval by the Ontario Securities Commission.
Disclosure of Voting Rights
Although the amendments require issuers to issue a news release
with detailed results of the vote for the election of directors,
the TSX specifically determined not to require votes by ballot.
Accordingly, the practice of electing directors by show of hands is
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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