Gender diversity on corporate boards continues to be a hot topic
for activist shareholder groups in Canada. At the end of April
2015, the shareholders of BCE Inc. will vote on a proposal that
would impose a strict quota on the proportion of women appointed to
its 13-person board. The proposal is being advanced by a group of
shareholders styled as Mouvement d'éducation et de
défense des actionnaires (Médac). While the group has
proposed gender-related resolutions before, this is the first time
that it has sought to impose a strict quota on the company. The
quota would require BCE to maintain a minimum of 40% female
representation on its board by 2020. While BCE has itself pledged
that women will occupy at least one-quarter of independent
directorships by the end of 2016, Médac's view is that
this does not go far enough.
While public companies are increasingly setting their own
targets for board-level gender diversity, the imposition of strict
quotas via shareholder resolutions puts additional pressure –
and more stringent legal requirements – on companies to
deliver. As we discussed in a previous blog post, the implications of
failing to meet a self-imposed corporate pledge are not to be
discounted. That said, the consequences of falling short of a
company-imposed promise to increase the number of women on the
board of directors pale in comparison to those that would flow from
breach of a successful shareholder resolution.
As recently reported by the National Post, upon making his quota request
to BCE, the president of Médac said he was advised by the
company that it does not "have a legal obligation to add more
women". If this proposed shareholder resolution is successful,
BCE may suddenly find itself with one.
In its proxy circular, BCE has urged shareholders to reject this
resolution. The circular states that BCE's current pledge is
"appropriate for promoting diversity and the attraction of the
most highly qualified directors available". This statement
highlights the political sensitivity of quotas, discussed in our previous post. Quotas can difficult to live
with, particularly if the appointment committee of a given board of
directors feels that the best qualified candidate is male. That
said, concerns that strict quotas will lead to a 'watering
down' of talent at the board level have not be borne out by
experience. Indeed, studies have shown, and commentators have expressed that, on an
assessment of the available talent pool, there is no dearth of
highly qualified women to consider for top jobs. Several European
countries have had great success with the imposition of quotas,
despite their political sensitivity.
The role of regulators in the matter is ongoing. Notably, the
Ontario Securities Commission ("OSC") – after
extensive consultation and stakeholder engagement – did not
impose pre-determined quotas on public companies in the province.
Instead, as previously blogged, the Commission opted to
propose a "comply or explain" regime for all Ontario
issuers. On September 23, 2014, the OSC adopted the "comply or explain"
regime as part of the amendments to National Instrument 58-101,
which came into force on December 31, 2014.
The same amendments to National Instrument 58-101 were also adopted in most Canadian
jurisdictions by the Canadian Securities Administrators affecting
"Participating Jurisdictions" (i.e. Manitoba, New
Brunswick, Newfoundland and Labrador, Northwest Territories, Nova
Scotia, Nunavut, Ontario, Québec and Saskatchewan). Notably
absent are two of the four largest jurisdictions, namely British
Columbia and Alberta.
This means that issuers listed on the Toronto Stock Exchange,
and other non-venture issuers in a "Participating
Jurisdiction" must annually disclose:
director term limits and other
mechanisms of renewal of board members;
policies regarding the representation
of women on the board;
the board's or nominating
committee's consideration of the representation of women in the
director identification and selection process;
the issuer's consideration of the
representation of women in executive officer positions when making
executive officer appointments;
targets regarding the representation
of women on the board and in executive officer positions; and
the number of women on the board and
in executive officer positions.
While the regulatory "comply or explain" regime
established a baseline standard for gender diversity on boards, it
does not preclude more rigorous standards for specific companies if
shareholder resolutions like the one proposed by Médac are
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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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