Introduction

In time for the 2015 proxy season, the Canadian Securities Administrators have released amendments to National Instrument 58-101 Disclosure of Corporate Governance Practices and Form 58-101F1 Corporate Governance Disclosure ("Form 58-101F1") which will require TSX-listed companies to disclose certain information relating to the representation of women on boards of directors and in executive officer positions and on mechanisms of board renewal.

The British Columbia and Alberta Securities Commissions did not adopt the new disclosure rules (the "New Rules"). However, because the Ontario Securities Commission adopted the New Rules (which apply to non-venture issuers) and all TSX-listed companies are reporting issuers in Ontario, the New Rules will apply to British Columbia and Alberta companies listed on the TSX.

This memorandum summarizes the New Rules and incorporates examples of disclosure from both Australia (where similar rules are in place) and Canada (where some issuers implemented new measures in anticipation of the New Rules) which illustrate the potential range of responses to the New Rules.

The New Rules

The New Rules will apply to proxy circulars filed following an issuer's financial year ending on or after December 31, 2014. The New Rules will require companies to provide disclosure regarding the following six matters in the proxy circular sent in connection with an annual general meeting:1 1 If an issuer's financial year ended before December 31, 2014, then the disclosure will first be required in its 2016 proxy materials. If a company does not send a circular soliciting proxies for the election of directors at an annual meeting, the company must provide the disclosure in its annual information form. The information required by the New Rules may be incorporated into a proxy circular by reference, provided the other document has been filed or is filed simultaneously with the proxy circular.

  1. the number of women on the board and in executive officer positions;
  2. targets regarding the representation of women on the board and in executive officer positions;
  3. policies regarding the representation of women on the board;
  4. the board's or nominating committee's consideration of the representation of women in the director identification and selection process;
  5. the issuer's consideration of the representation of women in executive officer positions when making executive officer appointments; and
  6. director term limits and other mechanisms of renewal of the board.

The regulatory authorities examined a variety of measures, including hard quotas. However, the New Rules adopt a disclosure-based model in their aim to increase the representation of women. Generally, the New Rules are not prescriptive. That is, they do not require a company to, for example, adopt new policies or to take into consideration the representation of women when identifying new director candidates. What the New Rules do require is for a company to disclose why it has not implemented certain policies or taken into account certain considerations if it has not done so.

With this "comply or explain" model, also adopted in Australia, a company will have to either (a) comply with the New Rules and adopt and disclose the content of the necessary policies or make and describe the necessary considerations, or else (b) explain why it does not have such policies or make such considerations.

The following table sets out a quick reference guide to the New Rules and the disclosure required by a company if it chooses to either comply or explain.

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The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2014