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Updates on Continuous Disclosure and Corporate Governance in Securities Law

February 07, 2018

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Written By Jon C. Truswell

Three years following implementation of mandatory disclosure of women on boards and in executive officer positions, the new rules have marginally improved female representation. The percentage of women holding board seats increased slightly to 14 percent last year, up from 11 percent in 2015, while the percentage of issuers having at least one woman on the board increased to 61 percent in 2017 from 49 percent in 2015.

Disclosure of gender diversity requires that both the number and percentage of women on boards and in executive officer positions be included; if a written policy has been adopted, a description of the policy and explanation of how it applies must also be noted. Disclosure must address the process, if any, by which women are identified and selected to board and executive officer positions. Further, 22 percent of reporting issuers disclosed a general diversity policy, not a policy relating to the identification and nomination of female directors. If you have a general diversity policy, it must have specific provisions relating to the identification and nomination of female directors.

Board member term limits and other renewal mechanisms should be described together with their contribution to board renewal. There was no marked improvement in the disclosure of director term limits: only 21 percent of the sample size of 722 reporting issuers had adopted term limits. Of those issuers, 50 percent had an age limit, 23 percent had a tenure limit and 27 percent had both. The most common reason for failure to adopt term limits is the potential for a negative impact on the continuity and experience of the board.

The Alberta Securities Commission found that many issuers were unaware of Canadian Securities Association (CSA) Staff Notice 51-333 Environmental Reporting Guidance regarding climate change risks, trends, risk oversight and governance.

Increasingly relevant in our digital age, CSA Staff Notice 51-348 – Staff’s Review of Social Media speaks to the concern over selective or misleading disclosure on social media and notes the importance of adopting a Social Media Governance Policy. Reporting issuers who use social media must take care to comply with securities laws even if social media is intended to be limited to a marketing tool.

Trends in Governance and Executive Compensation

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