Diversity proposal said to affect about 600 TSX firms
Some corporations must identify gender composition of their boards
About 40 per cent of corporations listed on the Toronto Stock Exchange will be required to identify the gender composition of their boards and to make public their diversity policies under a proposed new law, a Canadian government official said.
Bill C-25 was introduced Sept. 28 by Innovation Minister Navdeep Bains and proposes a series of changes to corporate governance rules, such as allowing companies to communicate with shareholders online and changing the rules for the electing directors.
Distributing Canadian companies — those that sell shares, report to a securities commission and fall under the Canada Business Corporations Act — will also be required to publish the gender composition of boards and senior management, while also disclosing diversity policies or explaining why they don’t have one. That change affects about 600 of the roughly 1,500 companies on the TSX, the official said Friday in a briefing, on condition they not be identified because of departmental policy.
The diversity changes were designed to “support the representation of women on boards” and ensure “all members of society” participate in the Canadian marketplace, the government said.
The government stopped short of setting a target for the number of women on boards or defining what diversity is. In Canada, men have filled 85 per cent of empty board seats this year.
The proposed federal changes were welcomed by the Ontario Securities Commission.
“As we continue to call on corporate Canada to make gender diversity a priority in the boardroom and executive suite, we are especially pleased by the proposal to expand our ‘comply or explain’ approach to more Canadian companies,” Maureen Jensen, OSC chief executive officer said in a written statement distributed by a spokeswoman.
The proposal would also eliminate the use of so-called bearer shares. The government isn’t aware of any bearer shares currently in use, but made the move to head-off attempts to use them in money laundering or terrorist financing, the official said.
The bill proposes changing the rules around electing directors — in particular, directors who are running unopposed will now face votes in favour or in opposition and require a majority to take the position. Under the current rules, electors voting for unopposed directors could only vote for them or withhold their vote, with withheld votes not counted, the official said. That, in effect, allowed unopposed directors to be elected with a single vote in favour, the official said.
The bill won’t take effect until it’s passed by lawmakers, though Prime Minister Justin Trudeau’s governing Liberal Party holds a majority. Trudeau, a self-described feminist, appointed a gender-balanced cabinet after taking power last year.
The Canada Business Corporations Act affects 270,000 companies, a significant portion of which are small or medium sized firms with no share issuance and to whom some of the changes won’t apply.