Securities regulators across Canada (non-participating
jurisdictions include Alberta, Prince Edward Island and British
Columbia) have adopted new disclosure requirements targeting board
policies for renewal and gender diversity that will have
implications for the upcoming proxy season. The new requirements,
effective as of December 31, 2014, have the stated purpose of
increasing transparency for investors and other stakeholders
regarding the representation of women on boards and in senior
management of non-venture issuers. This transparency is intended to
assist investors when making investment and voting decisions.
Non-venture issuers in participating jurisdictions will now need
to provide disclosure of the following annually in their management
information circular and/or annual information form:
director term limits and other
mechanisms of board renewal;
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.
The amendments do not impose a requirement for issuers to have a
specified quota of women in executive officer positions or on
boards. Instead, the amendments follow a "comply or
explain" approach whereby an issuer would need to confirm that
it has a policy regarding the specific disclosure requirement (such
as term limits for directors) and provide disclosure regarding the
policy. If the issuer has no such policy in place, it must explain
why it does not and disclose potential risks associated with not
having such a policy in place. According to the Ontario Securities
Commission, the "comply or explain" approach is
consistent with existing corporate governance disclosure
requirements and will allow issuers to determine how gender
diversity and board renewal will be addressed in light of the
issuer's unique circumstances. However, many commentators have
questioned whether these disclosure requirements will bring about
any meaningful change.
For the background of the consultation process undertaken in
connection with the new board renewal and diversity requirements,
please see Aird & Berlis LLP's
August 2013 Securities Law Bulletin.
The full CSA Notice of amendments to National Instrument 58-101
can be found here.
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