In late 2014, the Canadian Securities Administrators (CSA) published “comply or explain” rules regarding female representation in director and executive officer positions. The requirements were codified in National Instrument 58-101 (the Disclosure Requirements) and created a positive duty for issuers in participating jurisdictions to disclose the details of female representation, including issuers’ targets, policies, and mechanisms to address female representation in director and executive officer roles. Where issuers do not adopt such mechanisms or consider female representation, they are required to explain their reasons for not doing so. The Disclosure Requirements were adopted in all CSA jurisdictions except for BC and Prince Edward Island on December 31, 2014 (with the exception of Alberta, which did not adopt until December 31, 2016) (the Participating Jurisdictions).
Following the adoption of the Disclosure Requirements, the CSA conducted a review of the progress of female representation for women on boards and in executive officer positions. We reported on this review (CSA Staff Notice 58-309) in late 2017.
In January 2018, we posted that we expected further discussions surrounding board gender diversity in the lead up to the 2018 proxy season, with leading proxy advisory firms such as the Institutional Shareholder Services and Glass Lewis & Co. LCC adding a voting policy with respect to board gender diversity to their 2018 proxy voting guidelines for Canada.
As 2018 progresses, it is clear that discussions about gender diversity remain an ongoing area of focus for regulators. On February 26, 2018, the British Columbia Securities Commission (BCSC) published a notice and request for comments seeking input on the gender diversity Disclosure Requirements in NI 58-101 (the Consultation). Although BC has not adopted the Disclosure Requirements, BC-based TSX-listed and other non-venture issuers must comply with the Disclosure Requirements regardless, as they report in at least one of the Participating Jurisdictions.
The Consultation, which is running in tandem with consultations on the same issue by the Participating Jurisdictions, is meant to assist the BCSC in understanding the views of BC market participants as well as the benefits and challenges of diversity-related requirements. Comments are meant to discuss the Disclosure Requirements generally, and whether Canadian securities regulators should consider any further regulatory measures or actions in this area.
The Consultation is asking for some more specific inputs as well, such as:
- the experience so far in providing information mandated by the disclosure requirements;
- whether the disclosure requirements provide investors with the necessary information to inform their investment and voting decisions and how that information is incorporated;
- whether corporate governance guidelines regarding gender diversity-related governance policies should be implemented and if existing guidelines are sufficient; and
- whether issuers should be required to disclose if they have policies relating to diversity other than gender.
Based on the specific questions asked by the BCSC, it is clear that the Commission to be turning its mind to how the disclosure process can be improved and whether the tools already in existence, such as governance policies and prescribed format, are satisfactory.
The author would like to thank Justine Smith, articling student, for her assistance in preparing this legal update.