Toronto Stock Exchange Set to Strengthen Corporate Governance Requirements


[author: Aleksandra Doerffer]

On October 4, 2012, the Toronto Stock Exchange (TSX) announced that it has received notice of approval from the Ontario Securities Commission (OSC) to proceed with amendments to the TSX Company Manual (Manual) that aim to strengthen requirements relating to corporate governance. Specifically, the TSX will amend Parts I and IV of the Manual which specify rules pertaining to how a listed issuer elects its board of directors (Amendments).

The revised rules, which will become effective on December 31, 2012, will include the following requirements:

(a) to elect directors annually;

(b) to elect directors individually, rather than as a slate;

(c) to publicly disclose the votes received for the election of each director;

(d) to disclose if they have adopted a majority voting policy for uncontested director elections, and to disclose reasons in the event of lacking such a policy; and

(e) to disclose to TSX if a director receives a majority of “withhold” votes, if they do not have a majority voting policy.

“Toronto Stock Exchange is committed to further enhancing domestic and global confidence in Canada’s capital markets,” said Kevan Cowan, President, TSX Markets and Group Head of Equities, TMX Group. “These changes bring additional transparency to the board selection process and help to strengthen our markets’ reputation while aligning our practices to other major international jurisdictions.”

All applicants for listing on TSX after December 31, 2012 and applicants with listing applications in progress will be expected to demonstrate that they are in compliance with the Amendments, and if not, to explain the plan and time frame in which they will comply. All TSX listed issuers and applicants are expected to be in compliance with the Amendments by December 31, 2013, and will otherwise be considered to be in breach of the Manual.


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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