Canada: ISS 2017-2018 Governance Principles Survey: Unequal Voting Rights, Board Diversity And More

Institutional Shareholders Services (ISS) recently announced the results of its 2017-2018 Governance Principles Survey. This high-level survey of the institutional investors, corporate executives, board members and other interested parties examined a small number of high-profile corporate governance issues and constitutes the initial part of ISS's annual two-part global policy survey. The more comprehensive policy application survey closed in early October 2017.

The Survey

A key part of ISS's annual policy formulation process, the Survey is designed to collect feedback from various market participants about emerging corporate governance issues and trends. Final benchmark voting policy updates will be released in mid-November 2017 (effective for meetings on or after February 1, 2018) following an open comment period on draft policy updates which is scheduled to be released by ISS in late October. While survey topics may reflect issues that ISS is tracking over the short or medium term, they can also result in future ISS policy or QualityScore amendments.

Survey Topics and Key Takeaways

While Canadian respondents represented only 9% of the total Survey respondents, with 90% of respondents being from the U.S., the following Survey results will be of interest to Canadian market participants:

  • Board Gender Diversity. ISS reports that responses in this area reflect the growing global focus on increasing the number of female directors on public company boards. A majority of both investor and non-investor respondents (69% and 54% respectively) felt that an absence or lack of female directors on public company boards was considered problematic. A disclosure policy describing the considerations taken by a company's board to increase gender diversity would mitigate the concern for 26% of such investor respondents and more than half of the non-investor respondents. This feedback is consistent with the approach taken in Canada, where NI 58-101 Disclosure of Corporate Governance Practices requires issuers to disclose whether a written policy on the representation of women on the board and in executive positions has been adopted and if not, the reasons for not doing so. Disclosure about, among other things, considerations for increasing the level of representation of women on the board in the nominating process is also required. The CSA recently noted in Multilateral Staff Notice 58-309, the CSA's third annual review of disclosure regarding gender representation on boards and in executive officer positions in response to the NI 58-101 requirements, that, among other things, regardless of issuer size, issuers that had adopted written policies regarding representation of women on boards had a higher percentage of women on their boards compared to issuers without such a policy. Stikeman Elliott's own internal survey of the companies in the TSX/S&P 60 shows that in 2017, 80% of those issuers now have written gender diversity policies and that 35% of issuers on the TSX/S&P 60 have boards comprised of 30% or more women. Click here for recent blog posts in our Board Diversity Series.
  • Virtual Meetings. While virtual shareholder meetings have not yet been widely adopted in Canada, with the first Canadian virtual shareholders meeting having taken place in early 2017, the implications of a transition away from physical meetings has raised concern among some shareholders. When asked about their views on the use of online mechanisms to facilitate shareholder participation at shareholder meetings, more than 36% of investor respondents considered the practice acceptable if it were a "hybrid" meeting but not a "virtual-only" meeting, with 8% not supporting either type. Another 32% were comfortable with both "hybrid" meetings and "virtual-only" meetings if the latter provided the same shareholder rights as a physical meeting. Finally, 19% of investors considered both types of meetings to be acceptable without reservation.
  • Multi-Class Capital Structures With Unequal Voting Rights. In the Survey, ISS solicited responses on multi-class share structures, which it presented as a practice increasingly under scrutiny in light of the recent Snap Inc. IPO (in which the public was only offered non-voting shares). Investors and non-investors are split on the appropriateness of these structures, with 43% of investor respondents indicating they are always problematic (even in the context of an IPO), and 50% of non-investors of the view that companies should have the right to choose their capital structure. Another 43% of investor respondents thought that these structures are only problematic if not subject to automatic sunset provisions or periodic re-approval by shareholders. This finding is consistent with the findings of ISS' 2016-2017 annual survey in which 57% of investor respondents were in favour of ISS's adverse vote recommendations in cases where sunset provisions were lacking. Currently, the ISS 2017 Proxy Voting Guidelines for TSX-Listed Companies recommend a vote against proposal to create a new class of common stock that will create a class of common shareholders with diminished voting rights unless certain criteria are met, including, among other things, a sunset provision.
  • CEO Pay Ratio Disclosure. Currently, Canadian public companies are not required to disclose the ratio of CEO pay to the pay of the median company employee or any other executive pay ratios. However, the 2018 introduction of pay ratio disclosure in the U.S. and a similar new disclosure requirement to be implemented in the UK, generated a survey question on how respondents intend to analyze data on pay ratios. Of the investor community, 63% of respondents indicated that they would compare a company's pay ratio across companies or industries, and would assess year-on-year changes in the ratio for a particular company, or do both. Among non-investor respondents, 44% did not regard pay ratios as useful data while 21% of non-investors intended to use the data in both ways.

Survey Participation

Responses from both the global institutional investor and corporate communities were significantly higher than last year's annual survey. Of the 602 global responses to the Survey, 51 were from groups based in Canada, which represented a combined investor (3%) and non-investor (6%) total of 9% of the respondents as compared to a total of 90% from the U.S.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions