Amendments for Director Elections and Majority Voting
The Toronto Stock Exchange has approved amendments to the TSX
Company Manual relating to director elections. The amendments come into effect on December 31,
2012, and will require each TSX listed entity to:
hold annual elections for all of its directors;
elect its directors individually;
disclose annually in its management information circular
whether a majority voting policy has been adopted for director
elections at uncontested meetings (and if not, to explain its
current practice for electing directors and why a majority voting
policy has not been adopted);
advise the TSX if any of its directors receives a majority of
"withhold" votes (where a majority voting policy has not
been adopted); and
disclose by press release the voting results for the election
of its directors.
The TSX has indicated that it believes the corporate governance
landscape in Canada is lagging vis-à-vis other jurisdictions
and has adopted the amendments to support good governance and
provide an effective voice to the Canadian investing public on the
director election process.
Securities and corporate laws in Canada allow for the election
of directors on an individual basis or by slate, through plurality
voting. Shareholders are permitted to vote "for" or
"withhold" their vote in respect of each director nominee
or the slate, but the "withholding" of a vote does not
count in the tally. As a result, a director nominee or slate can be
elected even if only one vote is cast "for" and the
majority of votes are "withheld". In contrast, under a
majority voting regime, shareholders vote separately for each
director nominee and, even though shareholders still vote
"for" or "withhold" their vote, the
"withheld" votes are considered to be votes
"against" such director nominee. If a director nominee
receives a majority of votes "against", he or she is
required to resign despite having been duly elected as a matter of
Proposed Amendments to Make Majority Voting Mandatory
The TSX has also circulated for public comment proposed additional amendments which would
require companies listed on the TSX to implement majority voting
for director elections at uncontested meetings. The proposed
additional amendments further provide that this requirement may be
satisfied by adopting a majority voting policy that requires a
director who receives a majority of the total votes cast
"withheld" from him or her to immediately tender his or
her resignation, which will be effective on acceptance by the board
of directors. The board of directors is then required to consider
the resignation and disclose its decision and the reasons for the
decision to the public no later than 90 days after the date of the
resignation. The comment period for these proposed changes ends on
November 5, 2012, and are intended to take effect on December 31,
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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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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