• Women on Boards: Proposed Disclosure Requirements
  • February 3, 2014 | Authors: Alexandra Iliopoulos; Carolyn L. Stroz
  • Law Firm: Cassels Brock & Blackwell LLP - Toronto Office
  • The Ontario Securities Commission (the “OSC”) has published for comment proposed amendments (the “Amendments”) related to director term limits and the representation of women on boards and in executive officer positions. The amendments follow a “comply or explain” model and do not require companies to adopt a specified quota of women on boards or in senior management.

    If adopted in the current form, the Amendments will require issuers to consider and report on their policies, or lack thereof, related to board diversity. The OSC has identified the following items that would require annual disclosure by TSX-listed and other non-venture issuers reporting in Ontario.

    • Director term limits

    Mandatory director term limits are not being proposed however, issuers will be required to disclose director term limits or an explanation for the absence of such limits. The OSC notes that regular renewal of board membership contributes to the effectiveness of a board. Director term limits can promote an appropriate level of board renewal and in doing so provide opportunities for qualified board candidates, including women.

    • Policies regarding the representation of women on the board

    Issuers will be required to disclose a description of their policies regarding the representation of women on the board or an explanation for the absence of such policies. The OSC notes that corporate decision-making benefits from diverse opinions and viewpoints and it is important to consider a broad pool of qualified directors when considering new candidates.

    • The board’s consideration of the representation of women in identifying and nominating directors

    Issuers will be required to disclose the consideration given by the board or nominating committee to the representation of women on the board in identifying and selecting director candidates or an explanation of the absence of such consideration. Issuers should disclose meaningful information about the appointment process and, in particular, how the board or nominating committee addresses gender diversity in the director identification and selection process. This disclosure should include the steps the board or nominating committee takes to ensure that a diverse range of candidates is considered.

    • The issuer’s consideration of the representation of women in executive officer positions when making executive officer appointments

    Issuers will be required to disclose the consideration given to the representation of women in executive officer positions when making appointments or an explanation of the absence of such consideration. The OSC notes that a focus on diversity in employee recruitment, development and promotion can facilitate identifying, developing and promoting employees with a broad range of skills and expertise needed to execute corporate goals. Investors and other stakeholders would benefit from having greater transparency into whether an issuer considers the representation of women in executive officer positions when making executive officer appointments as this may be representative of the issuer’s approach to diversity more generally.

    • Targets regarding female directors and female executive officer positions

    Issuers will be required to disclose any targets voluntarily adopted by the issuer regarding female representation on the board or in executive officer positions and, if none, an explanation for their absence. If such targets are adopted, disclosure of the annual and cumulative progress of the issuer in achieving its targets will also be required. The OSC notes that transparency regarding the targets set by issuers to investors and other stakeholders will provide for some level of accountability by issuers and that in turn may result in measurable change in the levels of representation of women on boards and in executive officer positions.

    • The number of women on the board and in executive officer positions

    The OSC notes that measurement is a critical component of the Amendments as reporting on an issuer’s gender diversity profile can be an indication of the effectiveness of the Amendments and facilitates accountability by the issuer. This type of reporting also provides greater transparency to investors and other stakeholders and enables them to make comparisons among issuers.

    Comment Period

    The Amendments, if enacted, would amend Form 58-101F1 - Corporate Governance Disclosure of National Instrument 58-101 - Disclosure of Corporate Governance Practices. The OSC is soliciting comments on the Amendments by April 16, 2014.