If you are proposed as a director of a TSX-listed issuer, you
will need a majority of the votes in order to be elected.
TSX-listed issuers will be required to adopt a majority voting
policy or amend their constating documents in order to give effect
to these new requirements.
There are two main exceptions to the majority voting
issuers that are majority controlled; or
the election of directors at contested shareholders'
meetings, being meetings where the number of directors nominated
for election is greater than the number of seats available on the
These requirements come into force for issuers with fiscal years
ending on or after June 30, 2014 effective their first annual
shareholder meeting after that date.
Impact on Directors
The requirement under corporate statutes is that directors can
be elected with less than a majority of the votes, simply because
they were nominated. There is no requirement under corporate
statutes for a director to be elected by a majority of the votes.
Shareholders either vote "for" a director or
"withhold" their vote. The TSX will require
directors to resign if they are not elected by a majority (50% +1)
of votes cast at the meeting. The board must then determine
whether or not to accept the resignation within 90 days of the
shareholders' meeting, which the TSX says should be accepted
unless there are exceptional circumstances.
Majority Voting Policy
In order to give effect to these requirements, each issuer will
be required to adopt a majority voting policy. Alternatively,
an issuer can include the majority voting requirement and related
procedures in its articles, bylaws or other similar instruments in
a manner acceptable to the TSX.
New Disclosure Requirements
Issuers will need to describe their majority voting policy in
their proxy materials sent out in connection with their annual
meeting of shareholders. Issuers that are majority controlled and
which are relying on the exemption from the majority voting
requirement must disclose their reliance on the exemption in their
proxy materials and provide an explanation for why they did not
adopt the policy. After an uncontested meeting at which
directors are elected, each issuer must disseminate a press release
disclosing the voting results for the election of each
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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