Women On Boards: OSC Proposes 'Comply Or Explain' Model Over Quotas

Author:Ms Jennifer Longhurst and William M. Ainley
Profession:Davies Ward Phillips & Vineberg

On January 16, 2014, the Ontario Securities Commission (the "OSC") published for comment proposed amendments to Form 58-101F1 Corporate Governance Disclosure (the "Proposed Amendments") under National Instrument 58-101 Disclosure of Corporate Governance Practices.The amended "comply or explain" disclosure rule would require issuers listed on the Toronto Stock Exchange (the "TSX") and other non-venture issuers to annually disclose any director term limits and the representation of women on boards and in executive officer positions, including the number and proportion of women in those roles. Davies recently flagged gender diversity as an important issue to watch this year in Davies Governance Insights 2013, the firm's annual review of key issues and trends shaping the Canadian corporate governance landscape. We expect the Proposed Amendments will be adopted in some form.

Background on Gender Diversity

Gender diversity among Canadian issuers received heightened attention in 2013.While the incidence of women holding leadership positions has been on the rise over the past two years, the rate of increase has been slow and significant gender disparity persists.

For example, out of the total 3,275 board seats of issuers on the S&P/TSX Composite Index and the S&P/TSX SmallCap Index, only 343 (or 10.5%) were held by women in 2013.The percentage of board positions held by women for issuers on the S&P/TSX 60 Index was approximately 18.4% in 2013. The OSC notes that based on 448 responses to its November 2013 survey of about 1,000 TSX-listed issuers regarding gender diversity, 57% of respondents indicated they have no female directors, only 3% had a female chair of the board or female lead director and 53% indicated that women held less than 10% of executive positions.

The Proposed Amendments come in response to calls from the Ontario Government in June 2013 for the OSC to undertake a public consultation process regarding disclosure of gender diversity. In July 2013, the OSC published OSC Staff Consultation Paper 58-401 Disclosure Requirements Regarding Women on Boards and in Senior Management (the "Consultation Paper").The Consultation Paper requested feedback on the OSC's proposed "comply or explain" model, including effective policies and practices for increasing the number of women on boards and the appropriate disclosure requirements. The OSC subsequently held a public roundtable to discuss the disclosure model set out in the Consultation Paper.


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