Canadian Securities Administrators Seek Input on Disclosure Regarding the Representation of Women in Public Companies and the Integrity of Proxy Voting

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This summer, Canadian securities administrators issued two consultation papers with comments due this fall. The first initiative is an Ontario Securities Commission (OSC) staff consultation paper on proposed new public company disclosure requirements respecting the representation of women on boards and in senior management, for which comments are due September 27, 2013.  The second is an initiative of the Canadian Securities Administrators (CSA) and seeks public input on specific issues regarding the integrity of the proxy voting system, for which comments are due November 13, 2013.

Disclosure Requirements Regarding Women on Boards and in Senior Management (OSC Consultation Paper 58-401)

The OSC consultation was initiated at the request of the Ontario government which foreshadowed the request in its May 2013 budget stating: “The government strongly supports broader gender diversity on the boards and in senior management of major businesses, not-for-profit firms and other large organizations....[T]he government will consider the best way for firms to disclose their approaches to gender diversity, with a view to increasing the participation of women on boards and in senior management.” 

The OSC consultation paper seeks input on effective policies for increasing the number of women on boards and in senior management and what related disclosure requirements would be most appropriate and useful. The model proposes that non-venture issuers (other than investment funds) will be required to provide annual disclosure respecting:

  • Measurement – the proportion of women on the board, serving as executive officers and in the whole organization.
  • Policies respecting the representation of women – whether the issuer has a policy to advance the participation of women in senior management and on the board and (1) if it does not have such a policy, an explanation of why it does not as well as any risks or opportunity costs associated with the decision not to have such a policy, or (2) if it does have such a policy, a summary of its key provisions, how the policy is intended to advance the participation of women in senior management and on the board, how it has been implemented, the progress on meeting the objectives of the policy, including the nature and extent of achievement of any quantitative objectives, and a description of how the board measures the effectiveness of the policy.
  • Consideration of the representation of women in the director selection process.
  • Consideration of the representation of women in assessing the board’s performance.

Review of the Proxy Voting Infrastructure (CSA Consultation Paper 54-401)

The CSA consultation paper principally seeks feedback on two issues that the CSA believes have the greatest potential to impact the ability of the proxy voting infrastructure to function accurately and reliably:

  • Accurate vote reconciliation – whether for securities held through intermediaries on behalf of beneficial owners there is an effective system for determining who is entitled to vote the shares.  In particular, the CSA has asked for input on the impact of share lending on vote reconciliation, the extent to which documentation errors affect voting and the nature and extent of over-reporting and over-voting.
  • Vote confirmation – what type of end-to-end vote confirmation system should be implemented to provide comfort to those voting that the vote was received and recorded as cast.

In addition to input on these two issues, the CSA is also seeking feedback on:

  • Impact of the OBO concept on voting integrity – whether issuers should have access to the identity of those beneficial owners who do not wish to have their identify disclosed (i.e. objecting beneficial owners or OBOs) in order to improve the accuracy and reliability of proxy voting.
  • Gaps in voting on behalf of managed accounts – whether intermediary back office processes are impeding voting by investment managers on behalf of beneficial owners.
  • Accountability of service providers involved in the proxy voting infrastructure.