Written By Adrienne Moore, Juliamai Giffen, Will Osler and Harinder Basra
The Ontario Government has announced a target that women comprise at least 40 percent of appointments to provincial boards and agencies by 2019 and is encouraging businesses to set gender diversity targets for their boards of directors.
The announcement follows the June 7, 2016, release of a report prepared by Catalyst Canada and commissioned by the Ontario Government. The government accepted all 11 recommendations set out in the report, including the following recommendations for companies:
- set the following targets by the end of 2017: 30 percent women board directors for all issuers that currently have at least one woman director; and one woman board director for all issuers that currently have no women directors;
- achieve the applicable target within three to five years;
- use director term and/or age limits to facilitate board renewal;
- establish a written policy describing the issuer's plans to increase representation of women on its board;
- require that the list of potential board candidates and interview pool for board positions consist of at least 50 percent women;
- remove restrictions on external board service and implement programs to match talent with board vacancies for both executive and non-executive director positions; and
- address gender equity at all levels of the company.
The government also accepted the recommendation that it encourage companies to set the specific targets identified in the report and the recommendation that it consider legislative or regulatory approaches if sufficient progress is not made toward the 30 percent target.
A steering committee will be convened by the government to advise on the implementation of the recommendations in the report. The committee members will include, among others, the Ontario Minister of Finance and the Chair of the Ontario Securities Commission.
The current “comply or explain” regime requires TSX-listed issuers to disclose the following gender diversity policies and practices in its annual filings or explain why it has not adopted such policies and practices:
- director term limits or other board renewal mechanisms;
- any written policy regarding the representation of women on the board (and if the issuer has a policy, a summary of it and disclosure of implementation, achievement of objectives and measurement);
- consideration of the level of representation of women in the director identification and selection process;
- consideration of the level of representation of women in executive officer appointments;
- any targets voluntarily adopted regarding the representation of women on the board and in executive officer positions; and
- the number and proportion of women on the issuer's board and in executive officer positions with the issuer and its major subsidiaries.
A review by certain Canadian securities regulators of over 700 TSX-listed issuers and their compliance with the “comply or explain” regime found that, of the issuers reviewed:
- 49 percent had at least one woman on their board;
- 15 percent added one or more women to their board in the past year;
- 60 percent with a market capitalization of greater than $2 billion had two or more women on their board;
- 62 percent with market capitalization under $1 billion had no women on their board;
- 7 percent set a target for women directors;
- 19 percent adopted director term limits;
- 56 percent adopted a mechanism of board renewal other than director term limits;
- more than 30 percent with a market capitalization greater than $2 billion adopted a written policy for identifying and nominating women directors; and
- of those issuers with written policies, 48 percent adopted or updated those policies in the past year.1
Bennett Jones will continue to monitor disclosure requirements for gender diversity on boards and provide updates on further developments.
Notes
- Canadian Securities Administrators, CSA Multilateral Staff Notice 58-307 Staff Review of Women on Boards and in Executive Officer Positions – Compliance with NI 58-101 Disclosure of Corporate Governance Practice (September 28, 2015).