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Wednesday, March 29, 2017


Gender diversity on corporate boards and in senior management roles remains one of the key topics in Canadian corporate governance. This issue gained momentum in 2014 when the securities regulatory authorities in Ontario, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Québec, Saskatchewan and Yukon (collectively, the “Participating Jurisdictions”) adopted amendments to National Instrument 58-101 – Disclosure of Corporate Governance Practices (“NI 58-101”) to enhance corporate governance disclosure requirements with respect to gender diversity policies and practices.

NI 58-101 requires all issuers listed on the Toronto Stock Exchange (“TSX”) reporting in the Participation Jurisdictions to make annual disclosures with respect to (i) director term limits and other mechanisms of board renewal; (ii) policies regarding the representation of women on the board; (iii) consideration of the representation of women in the director identification and selection process; (iv) consideration given to the representation of women in executive officer appointments; (v) the issuer’s targets regarding the representation of women on the board and in executive officer positions; and (vi) the number of women on the board and in executive officer positions (collectively, the “Required Disclosure”). The requirements under NI 58-101 follow a “comply or explain” approach whereby TSX-listed issuers in the Participating Jurisdictions must disclose their policies and any targets with respect to the representation of women on their boards and in executive officer positions as well as their consideration of the representation of women in their director identification and selection processes and when making executive officer appointments, or explain why none exist.

In addition to specific disclosure requirements on gender diversity, the amendments to NI 58-101 addressed board renewal, requiring issuers to disclose whether they have adopted term limits for directors or other mechanisms to limit the tenure of directors. Enhancing board renewal provides opportunities for qualified candidates to join a board, including those who are women.  For further details on the amendments to NI 58-101, please refer to our prior update on the topic.

Since the adoption of the amendments to NI 58-101, the Canadian federal government, provincial and territorial governments, securities regulators, proxy advisors and other capital market participants have continued to advance initiatives to improve the representation of women on Canada’s corporate boards. The following is a summary of their progress on a number of these initiatives.  

Regulatory Review of Women on Boards and in Executive Officer Roles

On September 28, 2016, the Canadian Securities Administrators (“CSA”) published their findings from a second review of compliance with the corporate governance disclosure requirements in NI 58-101 as they relate to women on boards and diversity policies, entitled CSA Multilateral Staff Notice 58-308 – Staff Review of Women on Boards and in Executive Officer Positions – Compliance with NI 58-101 Disclosure of Corporate Governance Practices(the “Staff Notice”).

The Staff Notice summarizes the CSA’s findings from their review of the corporate governance disclosure of 677 TSX-listed issuers with year ends between December 31, 2015 and March 31, 2016 to determine the impact of the mandatory disclosure requirements, and provides a year-over-year comparison to the CSA’s findings from their initial review of the prior fiscal year released on September 28, 2015.  Some of the key findings are set out below:

  • Overall, the percentage of board seats occupied by women increased from 11% to 12% compared to the prior year; 
  • 55% of issuers had at least one woman on their boards, which is a 6% increase compared to 2015;
  • Large issuers (over $10B market capitalization) continue to lead in female representation on their boards, with 23% of board seats held by women;
  • 21% of the issuers reviewed had adopted a policy on the identification and nomination of female directors, compared to 15% in 2015. Issuers that adopted such a policy had a higher percentage of women on their boards (18%) than those without a policy (10%);
  • 9% of issuers had a formal target for the representation of women on their boards, compared to 7% in 2015, and, similarly, issuers that adopted targets had, on average, a higher percentage of women on their boards (25%), compared to those without targets (10%);
  • The number of women on boards and in executive positions continues to vary significantly by industry, with the utilities and retail sectors having the most women on boards. Only 18% of utilities issuers and 21% of retail issuers reported having no women on their boards. In comparison, each of the mining, oil and gas and technology sectors had the most issuers with no women on their boards, at 62%, 60% and 48%, respectively.

On March 7, 2017, the CSA published the underlying data from their review of women on boards and in executive officer positions which was used to prepare the Staff Notice. The detailed data include the name and industry of the 677 TSX-listed issuers reviewed, whether each issuer has adopted a target regarding the representation of women on boards and in executive officer positions, and, if so, whether such target was achieved.

Regulatory and Other Responses

Ontario Securities Commission

While the Staff Notice revealed modest improvements in the number of women on boards, in news reports, Maureen Jensen, Chair of the Ontario Securities Commission (“OSC”), expressed her disappointment in the results and the slow progress in improving gender diversity in senior roles.  Specifically, she pointed out that of the 521 board seats that became vacant in 2015, only 15% were filled by women. 

The OSC has committed to providing issuers three years, ending in 2017, to show progress, failing which the OSC will undertake a review to consider whether to toughen the current “comply or explain” regime. In its Statement of Priorities for the 2017 fiscal year, the OSC announced that as a priority issue it will continue to focus on gender diversity, including considering additional measures aimed at achieving greater gender diversity on boards and in executive officer roles.

Ontario Government and the Catalyst Report

In June 2016, the Ontario government announced that it had accepted all 11 recommendations in Catalyst Canada’s report, entitled Gender Diversity on Boards in Canada: Recommendations for Accelerating Progress (the “Catalyst Report”). Catalyst is a non-profit organization focused on accelerating progress for women through workplace inclusion. The Ontario government commissioned the report in order to assess progress for women in the workplace and seek recommendations for companies, business leaders and the Ontario government to address Canada’s lag vis-a-vis other developed nations in achieving gender balance on corporate boards.

The Catalyst Report recommends that issuers set specific gender diversity targets by the end of 2017 and achieve them within three to five years. Specifically, Catalyst recommends that all issuers with one female director target 30% representation by 2017, and that all issuers with no female directors aim to have at least one female board member. The Catalyst Report also recommends that issuers adopt at least one mechanism to facilitate board renewal, such as director term and/or age limits, and establish written policies describing how issuers specifically intend to increase representation of women on their boards. To address gender diversity at all levels of an organization, the Catalyst Report recommends that issuers monitor and track promotion rates, aiming for proportional promotion and retention at each level, invest in inclusive leadership training and address pay equity by adopting pay transparency and ensuring there are no wage gaps.

In accepting all 11 recommendations in the Catalyst Report, the Ontario government has established a target that, by the end of 2019, all Ontario provincial boards, agencies and commissions will be comprised of at least 40% women. The Ontario government has also committed to considering more stringent legislative or regulatory approaches if the 30% target for women on corporate boards in Ontario is not met by the end of 2017.

Proposed Amendments to Federal and Ontario Legislation

In September 2016, amendments to modernize Canada’s corporate law to promote gender diversity on corporate boards were proposed in Bill C-25, draft legislation to amend, among other statutes, the Canada Business Corporations Act (“Bill C-25”). If passed into law, Bill C-25 would impose the Required Disclosure on all federally incorporated reporting issuers (including issuers listed on the TSXV), plus disclosure: (i) indicating whether the corporation has adopted a written policy relating to diversity other than gender amongst the directors and members of senior management; (ii) summarizing the objectives and key provisions of that policy, if adopted; and (iii) explaining why the corporation has not adopted a policy, if it has not done so. Annual disclosure to a corporation’s shareholders with respect to the gender composition of a corporation’s board and senior management as well as its diversity policies would be required.  Similar to NI 58-101, the proposed rules follow a “comply or explain” approach. To address board renewal, Bill C-25 would also require reporting issuers to hold elections of the entire board of directors annually. For details on the amendments proposed in Bill C-25, please refer to our legal update on this topic. Bill C-25 was tabled in the House of Commons in September 2016. Following the second reading of Bill C-25 and its referral to a Committee of the House of Commons for more detailed study, a report with recommended amendments to Bill C-25 was submitted by the Committee to the House of Commons on March 22, 2017.

On March 7, 2017, Bill 101, Enhancing Shareholder Rights Act, 2017, a private member’s bill, was presented for consideration to the Legislative Assembly of Ontario. Bill 101 proposes various amendments to the Business Corporations Act (Ontario) (“OBCA”), including a new requirement for certain OBCA corporations to place before their shareholders, at every annual meeting, prescribed information respecting diversity among directors and members of senior management. Bill 101 has now passed second reading and has been referred to the Standing Committee on Finance and Economic Affairs for further study.

Proxy Advisors

While proxy advisors such as Institutional Shareholder Services (“ISS”) and Glass Lewis have not taken a position on the representation of women on corporate boards, both have expanded on board diversity and renewal in their respective 2017 Canadian proxy voting guidelines.

In its 2017 Canadian proxy voting guidelines, Glass Lewis notes that “nominating and governance committees should consider diversity when making director nominations within the context of each specific company and its industry” and that “shareholders are best served when boards make an effort to ensure a constituency that is not only reasonably diverse on the basis of age, race, gender and ethnicity, but also on the basis of geographic knowledge, industry experience, board tenure and culture”.  However, the guidelines do not include a specific recommendation or consequence with respect to diversity on corporate boards.

Similarly, ISS has not specifically referenced the representation of women on boards in its 2017 Canadian proxy voting guidelines for both TSX-listed companies and venture-listed companies.  However, ISS has added the number and proportion of women on a board to the metrics included in the ISS Governance QualityScore (a scoring and screening solution, underpinned by hard data, designed to help institutional investors identify governance risk within their portfolio companies) for all key global capital market regions, including Canada. In its QualityScore Overview and Updates report published in November 2016 (“2016 QualityScore Overview”), ISS notes that “according to some academic and other studies, increasing the number of women on boards of directors correlates with better long-term financial performance. Such findings could have a significant effect on the nomination of women as corporate officers and directors.”

On the issue of board renewal, Glass Lewis’ 2017 Canadian proxy voting guidelines maintain that “the board should evaluate the need for changes to board composition based on an analysis of skills and experience necessary for the company, as well as the results of the director evaluations, as opposed to relying solely on age or tenure limits.” Despite not endorsing age or term limits for directors to facilitate board renewal, the guidelines recommend that votes be withheld from the chair of the nominating committee where “the board’s failure to ensure the board has directors with relevant experience, either through periodic director assessment or board refreshment, has contributed to a company’s poor performance”.

ISS does not specifically address director tenure in its proxy voting guidelines; however the ISS Governance QualityScore for Canada, the United States and certain other regions includes a metric on the proportion of non-executive directors on the board with a “lengthy tenure.”  ISS has not provided a benchmark number of years that would indicate a “lengthy tenure” for the purposes of the ISS Governance QualityScore, and the reference in the commentary for this metric to “a tenure of more than nine years,” which was contained in ISS’ previous 2015 QualityScore Overview and Updates report, has been removed and replaced with a tenure that is “higher than the recommended local best practice”.


It has been recently reported in newspaper accounts that institutional shareholders have filed proposals with targeted Canadian public companies asking them to add women to their boards. If these companies do not add women to their boards, these shareholders have threatened to withhold votes for election for directors on the nominating committees of those companies. Athough these proposals would not be binding on the targeted companies, they would show clear shareholder support for addressing diversity concerns.


The foregoing intiatives represent positive efforts towards the promotion of gender diversity on boards and in senior management. We will continue to monitor progress and provide updates on any significant developments.

If you have any questions with respect to this update, please contact Mark Wilson (, Julie Anderson (, Davia Wang ( or any other member of our Corporate Governance practice group.

This update is intended as a summary only and should not be regarded or relied upon as advice to any specific client or regarding any specific situation