OSC Proposes Rule Amendments Regarding Disclosure of Women on Boards and in Senior Management

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On January 16, 2014, the Ontario Securities Commission (OSC) released proposed amendments to enhance the disclosure of boards’ gender diversity.

The proposed amendments would require TSX-listed issuers (and other non-venture issuers) that are reporting issuers in Ontario (referred to as “issuers” in his note) to provide disclosure regarding the following matters on an annual basis:

  • director term limits,
  • policies regarding the representation of women on the board,
  • the board’s or nominating committee’s consideration of the representation of women in the director identification and selection process,
  • the issuer’s consideration of the representation of women in executive officer positions when making executive officer appointments,
  • targets regarding the representation of women on the board and in executive officer positions, and
  • the number of women on the board and in executive officer positions.

The disclosure model would be one of “comply or explain”, consistent with existing corporate governance disclosure requirements.

The proposed amendments are the result of feedback received in response to proposals set out in OSC Staff Consultation Paper 58-401 Disclosure Requirements Regarding Women on Boards and in Senior Management in which the OSC indicated that it was considering amendments to National Instrument 58-101 Disclosure of Corporate Governance Practices.

According to the OSC, the proposed amendments are intended to encourage more effective boards and better corporate decision-making by requiring greater transparency for investors and other stakeholders regarding the representation of women on boards and in senior management of issuers. This transparency is intended to assist investors when making investment and voting decisions.

Specific Disclosure Requirements

Mandatory Director Term Limits

The proposed amendments do not impose mandatory director term limits. However, they would require an issuer to disclose whether or not it has adopted term limits for the directors on its board and, to the extent an issuer has not adopted term limits, it should explain why it has not.

Policies Regarding the Representation of Women on the Board

The proposed amendments would require that issuers disclose whether they have adopted a policy for the identification and nomination of women directors, or if the issuer has not adopted such a policy, why it has not.

If an issuer has adopted such a policy, the proposed amendments would require the issuer to disclose: a short summary of its objectives and key provisions, the measures taken to ensure that the policy has been implemented effectively, annual and cumulative progress by the issuer on achieving the objectives of the policy and, if so, how the board or its nominating committee measures the effectiveness of the policy.

The Board’s or Nominating Committee’s Consideration of the Representation of Women in the Director Identification and Selection Process

The proposed amendments would require an issuer to disclose whether (and, if so how) its board or nominating committee considers the level of representation of women on its board in identifying and nominating candidates for election or re-election to its board, or if the issuer does not consider the level of representation of women on its board in identifying and nominating candidates for election or re-election to the board, the issuer’s reasons for not doing so.

Consideration Given to the Representation of Women in Executive Officer Positions When Making Executive Officer Appointments or an Explanation for the Absence of Such Consideration

The proposed amendments would require that an issuer discloses whether and, if so how, it considers the level of representation of women in executive officer positions when making executive officer appointments, or if it does not consider the level of representation of women in executive officer positions when making executive officer appointments, the issuer’s reasons for not doing so.

Targets Adopted Regarding the Representation of Women on the Board and in Executive Officer Positions or an Explanation for the Absence of Such Targets

The proposed amendments would require an issuer to disclose whether it has adopted target(s) regarding women on its board or in executive officer positions, and if not, why it has not. If the issuer has adopted target(s) referred to above, the proposed amendments would require it to disclose the issuer’s annual and cumulative progress in achieving its target(s).

The Number of Women on the Board and in Executive Officer Positions

The proposed amendments would require that an issuer disclose the number and proportion (in percentage terms) of directors on its board who are women, and the number and proportion (in percentage terms) of executive officers of the issuer, including all subsidiary entities of the issuer, who are women.

Comment Period

The comment period will end on April 16, 2014, and comments must be submitted in writing to comments@osc.gov.on.ca.

Topics:  Board of Directors, Canada, Diversity, Ontario Securities Commission

Published In: Business Organization Updates, Civil Rights Updates, General Business Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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