On February 13, 2014, the Toronto Stock Exchange
("TSX") approved amendments (the "Amendments")
to the TSX Company Manual that require each director of a TSX
listed issuer to be elected by a majority (50% + 1 vote) of the
votes cast with respect to his or her election other than at
contested meetings (the "Majority Voting Requirement")
where the number of directors nominated for election is greater
than the number of seats available on the board. The Amendments are
intended to improve corporate governance standards in Canada by
providing a meaningful way for security holders to hold individual
The Amendments, first proposed for comment on October 4, 2012,
supplement a number of corporate governance rule changes made by
the TSX in 2012, and will take effect on June 30, 2014. Issuers
with fiscal years ending on or after June 30, 2014 must comply with
the Amendments at their first annual meeting following such
Overview of Changes
Pursuant to the Amendments:
A listed issuer must implement a majority voting policy (a
"Policy") unless it satisfies the Majority Voting
Requirement in another manner acceptable to the TSX (for example,
by applicable statutes, articles or by-laws).
Any director who is not elected by at least a majority of the
votes cast must immediately tender his or her resignation to the
board of directors and:
within 90 days of the applicable shareholders' meeting, the
board shall determine whether or not to accept the
the resignation, effective when accepted by the board, shall be
accepted absent "exceptional circumstances" (the TSX has
not provided guidance on the interpretation of this beyond
acknowledging that the board is best positioned to make this
a director who tenders a resignation will not participate in
any meeting of the board or any sub-committee of the board at which
the resignation is considered;
the listed issuer shall promptly issue a news release with the
board's decision and provide the TSX with a copy; and
provided that the board determines not to accept a resignation,
the news release must fully state the reasons for that
An issuer who adopts a Policy must fully describe the Policy on
an annual basis in its materials sent to security holders in
connection with a meeting at which directors are being
Issuers that are majority controlled are exempt from the
Majority Voting Requirement but must disclose reliance on such
exemption annually in their proxy materials and their reasons for
not adopting majority voting.
TSX listed issuers that have not previously adopted a Policy
will now be required to do so. Issuers that have already adopted a
Policy prior to the Amendments should review the terms of such
policy to ensure compliance with the new rules.
The foregoing provides only an overview. Readers are
cautioned against making any decisions based on this material
alone. Rather, a qualified lawyer should be consulted.
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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