On July 10, 2013, the Toronto Stock Exchange (the
"TSX") released a staff notice (the
"Notice") providing guidance on the TSX
director election requirements (the
"Requirements"). The Requirements came
into force on December 31, 2012.
Pursuant to the Requirements, issuers listed on the TSX must,
among other things:
allow for individual director elections;
disclose in meeting materials sent to security holders whether
the issuer has adopted a majority voting policy for the election of
directors for non-contested meetings; and
immediately after a meeting at which directors are elected,
issue a news release detailing the voting results.
For more information on the Requirements, see our October 10,
2012 Update, Toronto Stock Exchange Announces New Director
Application of the Requirements to Interlisted International
Issuers The Requirements will begin to apply to interlisted
international issuers (being those listed on another stock exchange
or market) at the time the issuer mails materials for its first
annual general meeting occurring after the issuer has been listed
on the TSX for at least six months.
Once subject to the Requirements, an interlisted international
issuer may apply to the TSX for an annual waiver from the
Requirements. In deciding whether to grant a waiver from the
Requirements, the TSX will consider:
the policy objectives of the Requirements, being to strengthen
the Canadian corporate governance regime and support the integrity
of Canadian capital markets;
the issuer's level of activity in the Canadian market,
including the issuer's level of trading in Canada compared to
its primary exchange or market - with the TSX being more receptive
to applications where at least 75% of the value and volume of the
issuer's trading in the six months preceding the application
has occurred outside of Canada; and
whether the corporate governance framework to which the issuer
is subject demonstrates a comparable commitment to the policy
objectives of the TSX rules - with the TSX being seemingly more
inclined to grant a waiver where the issuer can confirm its
compliance with director election standards and the practices of
(or equivalent to) Australia, the United Kingdom or the state of
Delaware and those of its principal trading market.
A waiver from the Requirements must be disclosed by the issuer
in its annual information circular.
Content of News Releases
The news release disclosing the results of a director election
must provide sufficient detail regarding the level of support
received for each director. According to the Notice, this
requirement will be satisfied where an issuer discloses:
the percentages of votes received â€Üfor'
and â€Üwithheld' for each director;
the total votes cast together with the number that each
director received â€Üfor'; or
the percentages and total number of votes received
â€Üfor' each director.
If there was no formal count that would meaningfully represent
the level of support received by each director (e.g., when a vote
is conducted by a show of hands), the disclosure should at least
reflect the votes represented by proxy that would have been
withheld from each nominee had a ballot been called, as a
percentage of votes represented at the meeting.
Additional Guidance Provided in the Notice
The Notice clarifies that the Requirements will not apply to
issuers with director appointment rights that have been accepted by
the TSX. It also provides guidance for amending the issuer's
articles of incorporation to implement the Requirements. Finally,
the TSX cautions that avoidance of the stated policy objectives
through by-law provisions (such as extraordinary quorum
requirements for the election of directors), or other actions taken
by issuers to frustrate or avoid the Requirements, will be
considered a failure to comply with the Requirements.
The content of this article does not constitute legal advice
and should not be relied on in that way. Specific advice should be
sought about your specific circumstances.
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The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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