Oct 24, 2014 - amendments relate to: i) gender diversity on boards of directors and in executive officer positions; and
October 24, 2014
SECURITIES BULLETIN New Disclosure Rules: Gender Diversity and Board Renewal On October 15, 2014, the securities regulatory authorities in Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Quebec and Saskatchewan, finalized amendments to National Instrument 58-101 and Form 58-101F1 which create new disclosure requirements for issuers in the applicable jurisdictions. In particular, the amendments relate to: i) gender diversity on boards of directors and in executive officer positions; and ii) board renewal mechanisms, such as director term limits. The amendments institute a “comply or explain” standard that requires issuers to provide information regarding their policies with respect to the representation of women on boards and in executive positions. If an issuer has not adopted any such policy, it must explain why it has not done so.
Daniel Himmel, Associate 416.849.4101
[email protected]
Daniel is an associate in the Banking and Securities Group.
Gender Diversity Disclosure Requirements The new rules will require the following of non-venture issuers in the applicable jurisdictions: 1. Issuers must disclose whether they have adopted a written policy relating to the identification and nomination of women directors. Issuers without a written policy must disclose why they have not adopted one. Issuers with a written policy must disclose: i. a short summary of the policy’s objectives and key provisions;
2.
3.
ii.
the measures taken to ensure effective implementation;
iii.
annual and cumulative progress in achieving the policy’s objectives; and
iv.
whether and, if so, how the board measures the policy’s effectiveness.
Issuers must disclose how the board considers the representation of women in identifying and nominating board candidates. If an issuer does not consider the representation of women in this context, it must disclose why not. Issuers must disclose how they consider the representation of women when making executive officer appointments. If an issuer does not consider the representation of women in this context, it must disclose why not.
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This publication is intended for general information purposes only and should not be relied upon as legal advice. ©FOGLER, RUBINOFF LLP. ALL RIGHTS RESERVED. 2014
Securities Bulletin
SECURITIES
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4. Issuers must disclose whether they have adopted targets for women on the board of directors and/or in executive officer positions. If an issuer has not adopted targets, it must disclose why not. 5. Issuers that have adopted targets for women on the board or in executive officer positions must disclose those targets and the issuer’s annual and cumulative progress in achieving them. 6. Issuers must disclose the number and percentage of their directors who are women and the number and percentage of their executive officers (including at major subsidiaries) who are women. Board Renewal Disclosure Requirements The amendments will also require issuers to disclose whether or not they have adopted term limits for the directors on their boards or other mechanisms for board renewal. If they have not, they will need to disclose why they have not done so. Director term limits and other such mechanisms are traditionally considered methods of promoting an appropriate level of board renewal and in doing so providing opportunities for qualified board candidates, including women. Accordingly, issuers are advised to consider their approach to director term limits and other board renewal mechanisms to be able to provide the required disclosure. Preparing for the 2015 Proxy Season Issuers should consider their gender diversity and board renewal policies and practices in light of the new disclosure requirements. Issuers will need to determine, based on their particular circumstances and governance objectives, whether to develop a policy, adopt new practices or maintain the status quo, keeping in mind the related disclosure that will be required. Nominating Committees may wish to set aside extra time on their agendas to address these matters soon. Also of note, the regulators in the applicable jurisdictions mentioned that although not required at this time, issuers are welcome to voluntarily provide information about their approach to diversity more generally. Issuers may wish to consider addressing this in their disclosure. Application The amendments apply to management information circulars and annual information forms which are filed following an issuer’s financial year ending on or after December 31, 2014. The amendments do not apply to investment funds, designated foreign issuers or U.S. Securities and Exchange Commission foreign issuers, as defined in National Instrument 71-102 and certain other entities. _____ To review the full text of the new rules, see Multilateral CSA Notice of Amendments to National Instrument 58-101 - Disclosure of Corporate Governance Practices. ______ We encourage you to contact us if you would like to discuss the new disclosure requirements and their impact on your organization’s policies and practices.
This publication is intended for general information purposes only and should not be relied upon as legal advice. ©FOGLER, RUBINOFF LLP. ALL RIGHTS RESERVED. 2014
