The TSX today announced that it has approved amendments to
its Company Manual that will require that each director of a TSX
listed issuer be elected by a majority of the votes cast with
respect to his or her election other than at contested meetings
(the Majority Voting Requirement).
The TSX defines a "contested meeting" as a meeting at
which the number of directors nominated for election is greater
than the number of seats available on the board. Pursuant to the
amendments, issuers will be required to adopt a majority voting
policy unless the issuer otherwise satisfies the Majority Voting
Requirement in a manner acceptable to the TSX, such as through
applicable statute or constating documents. The amendments build on
amendments to the Company Manual announced in October 2012 that
introduced among other things, an obligation to disclose whether an
issuer had adopted a majority voting policy. As we
previously discussed, as a result of these further amendments,
security holders will now effectively be required to vote
"for" or "against" each individual board
nominee, rather than "for" or "withhold".
As part of the amendments, the TSX will now require that an
issuer's majority voting policy provide that (i) a director
immediately tender resignation to the board if he or she is not
elected by at least a majority (50% + 1 vote) of the votes cast
with regard to his or her election; (ii) the board determine
whether to accept the resignation within 90 days of the
shareholders' meeting, which resignation should be accepted
absent exceptional circumstances; (iii) the resignation become
effective when accepted by the board; (iv) a director who tenders a
resignation will not participate in board or committee meetings at
which the resignation is considered; and (v) the issuer promptly
issue a news release with the board's decision including, in
the case of a board not accepting the resignation, the reasoning
behind such decision. If an issuer adopts a majority voting policy,
the policy must be fully described on an annual basis in the
issuer's proxy materials in connection with a meeting at which
directors are elected.
As previously required, following an uncontested
shareholders' meeting where directors are elected, an issuer
must issue a press release disclosing the results of voting for the
director election. However, in such circumstances, the TSX will now
require issuers to disclose one of the following in their news
release: (i) the percentages of votes received "for" and
"withheld" for each director; (ii) the total votes cast
by ballot with the number that each director received
"for"; or (iii) the percentages and total number of votes
received "for" each director. Furthermore, the amendments
note that if no formal count has occurred that would meaningfully
represent the level of support received by each director, for
example where a vote is conducted by a show of hands, the TSX
expects the disclosure in the post-meeting press release to, at a
minimum, 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.
Issuers that are majority controlled are exempt from the
Majority Voting Requirement but are required to disclose such
exemption annually in their proxy materials along with their
reasons for non-adoption. Furthermore, majority controlled issuers
with more than one class of securities may only rely on this
exemption with respect to the class that is majority
The amendments will become effective for listed issuers on June
30, 2014 and issuers with fiscal years ending on or after June 30,
2014 are expected to comply with the amendments at their first
annual meeting following such date. Unless exempted, all TSX listed
issuers are expected to be in compliance with the amendments by
June 30, 2015, after which point any issuers who have not complied
will be considered in breach of the Company Manual.
Applicants for listing on the TSX following June 30, 2014 as
well as those with a listing application in progress at such time
will be expected to explain whether they are in compliance with the
amendments, and if not, to describe their plan for compliance.
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
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.
While most are well aware that the sale of a business is generally a complex process, even sophisticated business owners are surprised by just how much cost and effort is required to complete the sale.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).