Board of Director Gender Diversity ‘Comply or Explain’ Disclosure a New Reality for Canadian Reporting Issuers

On October 15th, 2014, all securities regulators in Canada other than Alberta and British Columbia announced amendments to National Instrument 58-101 (Disclosure of Corporate Governance Practices) that will require all non-venture reporting issuers to disclose their policies regarding the representation of women on the board of directors and management, along with policies related to director term limits.  The amendments are expected to come into force on December 31, 2014, in time for the 2015 proxy season.

The “comply or explain“ regime is consistent with the approach taken by Canadian securities regulators with respect to other corporate governance matters.   The amendments followed a lengthy consultation process, and are similar to the amendments proposed by the Ontario Securities Commission in January 2014 and the other participating jurisdictions in July 2014.   The impetus for the amendments is the significant underrepresentation of women on corporate boards and in the executive ranks of public companies in Canada. The intent of the amendments is to increase transparency for investors and other stakeholders regarding the representation of women on boards and executive teams, with a view to achieving greater gender diversity in the ranks of Canadian public company leadership teams.

The amendments do not impose targets or quotas for female representation.  Rather, companies will be required to disclose annually in their proxy circular or annual information form:

  • whether the issuer has a written policy regarding the representation of women on the board and if not, why not;
  • whether its board or nominating committee considered the level of representation of women in the director identification and selection process and if not, why not;
  • whether the issuer considers the representation of women in executive positions when making executive appointments and if not, why not;
  • whether the issuer has targets for the representation of women on its board and in executive positions, and the annual and cumulative progress in achieving such targets, and where there are no targets, why not; and
  • the number and proportion of women on the board and in executive positions of the company and each of its major subsidiaries.

In addition, companies are now required to disclose whether or not they have adopted director term limits or other board renewal mechanisms and if not, to explain why not.

Affected Canadian reporting issuers should take the following steps prior to issuing their 2015 proxy circulars:

  • the governance / nominating committee of the board or the board should assess the current level of gender diversity on the board and executive team;
  • the board should assess whether to implement gender targets and if so fix an appropriate time frame for implementing the targets.  In certain industries such as the technology industry, targets may be more difficult to meet over the short term;
  • the board should assess whether director term limits are in the company’s best interests in light of the current and planned composition of the board;
  • the board should implement a written policy that addresses the amendments; and
  • the board and senior management should consult with the company’s legal advisors regarding its 2015 proxy disclosure related to the amendments.

The LaBarge Weinstein team is available to help you to comply with the NI 58-101 amendments and your other corporate governance needs.  Contact Brigitte LeBlanc-Lapointe at with any questions.

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