Canada: TSX Requires Majority Voting For Election Of Directors

The Toronto Stock Exchange (TSX) has adopted amendments to its Company Manual (Amendments) which will require each director of TSX-listed issuers, other than issuers that are majority controlled, to be elected by a majority (50% + one vote) of the votes cast with respect to his or her election, other than at contested meetings (Majority Voting Requirement).

The Amendments were originally published by the TSX for public comment in a request for comments on October 4, 2012 (see our October 2012 Blakes Bulletin: TSX Adopts, and Proposes, New Director Election Requirements). The Amendments will come into effect on June 30, 2014. TSX-listed issuers with fiscal years ending on or after June 30, 2014 must comply with the Amendments at their first annual meeting following June 30, 2014.

The Majority Voting Requirement is not currently applicable to issuers listed on the TSX Venture Exchange.

RATIONALE FOR AMENDMENTS

The TSX sees the Amendments as a way to improve corporate governance standards in Canada by providing a meaningful way for security holders to hold individual directors accountable. It believes that the implementation of the Majority Voting Requirement will better align Canadian practices with those of other major jurisdictions. The TSX noted in its announcement of the adoption of the Amendments that in the summer of 2013 it surveyed a cross section of 200 issuers and found that 76% had already adopted a majority voting policy.

MAJORITY VOTING REQUIREMENT

The Amendments provide that each director of a TSX-listed issuer must be elected by a majority (50% + one vote) of the votes cast (i.e., more votes "for" than votes "withheld") with respect to his or her election, other than at contested meetings (i.e., meetings at which the number of directors nominated for election is greater than the number of seats available on the board).

Unless a TSX-listed issuer otherwise satisfies the Majority Voting Requirement in a manner acceptable to the TSX (e.g., if there is a majority voting requirement prescribed by applicable law or mandated by the issuer's constating documents), it will be required to adopt a majority voting policy that substantially provides for the following:

  • any director must immediately tender his or her resignation to the board of directors if he or she is not elected by at least a majority of the votes cast with respect to his or her election (since a majority voting policy will not override Canadian corporate law which provides that a director is validly elected in an uncontested election if he or she has any votes "for" as, under corporate and securities law, votes can only be "withheld", not voted "against");
  • the board must determine whether or not to accept the resignation within 90 days and the board must accept the resignation absent exceptional circumstances; 
  • the resignation will be effective when accepted by the board;
  • a director who tenders a resignation must not participate in any meeting of the board or any subcommittee of the board at which the resignation is considered; and
  • the listed issuer must promptly issue a news release announcing the board's decision and, if the board determines not to accept the resignation, the news release must fully state the reasons for that decision.

The TSX elected not to clarify what, in its view, would constitute "exceptional circumstances" that would permit a board to reject a resignation, stating that it believes that the board of an issuer, in exercising its fiduciary duty, should retain the latitude to determine whether exceptional circumstances exist in each case.

FURTHER DISCLOSURE OBLIGATIONS

Each TSX-listed issuer that adopts a majority voting policy must annually fully describe the policy in the materials sent to holders of listed securities in connection with a meeting at which directors are being elected. Also, following any uncontested meeting at which directors are elected, TSX-listed issuers must issue a news release disclosing the detailed voting results for each director candidate. Further to prior guidance provided by the TSX, such a news release should include one of the following:

  • the percentages of votes received "for" and "withheld" for each director;
  • the total votes cast by ballot with the number each director received "for"; or
  • the percentages and total number of votes received "for" each director.

In recognition of the fact that not all listed issuers conduct their votes by ballot, which would be necessary to obtain the information set out in the bullets above, the Amendments provide that if no formal count is conducted (e.g., the vote is by a show of hands), the TSX expects the required news release to at least disclose 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.

MAJORITY CONTROLLED COMPANY EXEMPTION

Issuers that are majority controlled (i.e., a security holder or company beneficially owns, or controls or directs, directly or indirectly, voting securities carrying 50% or more of the voting rights for the election of directors) are exempted from the Majority Voting Requirement. However, issuers with multiple classes of listed voting securities will only be able to rely on the exemption with respect to the controlled class or classes of securities that vote together for the election of directors. Therefore, controlled issuers with dual-class structures where both classes vote together for director elections will be exempt.

In adopting the Amendments, the TSX agreed with concerns expressed that majority voting at controlled companies may mislead minority security holders into believing that their vote may impact the outcome of director elections, when in fact the election results are "predetermined".

A controlled company relying on this exemption must annually disclose, in the meeting materials sent to security holders in connection with a meeting at which directors are to be elected, its reliance on the exemption and its reasons for not adopting majority voting.

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.

Authors
Events from this Firm
23 Nov 2018, Other, Toronto, Canada

Cybersecurity, including data privacy and security obligations, has become a critical chapter in every company’s risk management playbook.

28 Nov 2018, Speaking Engagement, Toronto, Canada

Arbitration has a number of advantages and some disadvantages for the resolution of domestic and international commercial disputes.

Similar Articles
Relevancy Powered by MondaqAI
Bennett Jones LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Bennett Jones LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
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).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions