Last year, the Canadian Securities Administrators
(CSA) began an initiative to increase transparency
regarding female representation on boards and in executive officer
positions. This was done by way of proposing amendments to the
existing National Instrument 58-101 Disclosure of Corporate
Governance Practices (NI 58-101). In the
proposal stage, these amendments faced the typical gamut of
comments, ranging from applause to dissatisfaction. Deal Law Wire
also commented on these amendments
in a previous post.
On December 31, 2014 the proposed amendments to NI 58-101 were
implemented and, as a participating jurisdiction, Ontario became
subject thereto. The amendments require the following annual
disclosure by non-venture issuers:
female participation (number and percentage) in director and
executive officer positions;
director term limits or other mechanisms of board renewal;
policies relating to the identification and nomination of
consideration of the representation of women in the director
identification and nomination process and in the appointment of
executive officers; and
targets for women on boards and in executive officer
At a minimum, a non-venture issuer must explain its reasons for
not adopting the above.
On September 28, 2015 the CSA released
CSA Multilateral Staff Notice 58-307, disclosing its review on
compliance with the amended NI 58-101. The review consisted of 722
TSX-listed issuers (the sample). Nearly half of
the sample consisted of companies operating in the mining and oil
and gas industries.
The results of the review include the following:
88% of the sample disclosed the number (or percentage) of women
on their board. 15% of the sample added one or more female to their
board in the past year.
Only 19% of the sample adopted director term limits, although
56% use a similar mechanism (typically, a form of annual board
assessment). The most common reason cited for not adopting this
mechanism is that term limits reduce continuity or experience of
Only 14% of the sample disclosed whether they adopted a written
policy and its contents relating to the identification and
nomination of women directors. Interestingly, the adoption rate of
such a policy was twice as common by a TSX-listed issuer with a
significant market capitalization.
60% of the sample disclosed that they did not consider female
directors in their identification and nomination process; rather,
most of the sample disclosed that they opted to fill the available
positions with the best candidates, without considering
Only 7% of the sample disclosed that they adopted a formal
target for the appointment of women as directors, and 2% for
executive officers. The most common reason cited for not adopting a
formal target was that candidates are selected solely based on
merit and not gender.
The review indicates that many non-venture issuers appear to be
hesitant to adopt the amendments or may require additional guidance
in order to increase compliance. Further, the review confirmed that
the issuer's size and its industry are the two most significant
factors impacting its level of adoption. Despite these factors,
issuers should note that the amended NI 81-101 presents the
opportunity for issuers to increase transparency in gender
diversity, which will likely be favourable to investment and voting
decisions of shareholders to come.
The author would like to thank Lauren Day, articling
student, for her assistance in preparing this legal
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