Topic: Corporate Governance

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Best Practices for Board Oversight and Disclosure of Environmental and Social Issues

In a recent post, we discussed investors’ growing interest in environmental and social (E&S) governance. As a recent report published by the Canadian Coalition for Good Governance (CCGG) demonstrates, public company boards are no less attentive to growing shareholder interest in E&S issues. The Directors’ E&S Guidebook (Guidebook), which is the product of consultations with industry leaders in the management of E&S factors, provides practical insights and recommendations for effective board oversight and disclosure of E&S matters.

Companies have good cause to respond to investor interest in E&S matters. For some, past incidents … Continue Reading

Activist Shareholders Trading on the Blockchain: Is the Prized Secrecy Compromised?

Background: Registered Shareholders and Beneficial Shareholders

While a registered shareholder holds its shares directly with a company and can be contacted through its transfer agent, a beneficial shareholder does not have the shares registered in its name. Instead, a securities depository is the registered shareholder. There are two types of beneficial shareholders, a Non-Objecting Beneficial Owner (NOBO) and an Objecting Bene­ficial Owner (OBO). A NOBO has authorized a financial intermediary to disclose its identity and share position. An OBO has taken affirmative steps to object to such disclosure. Therefore, while a NOBO can be contacted directly, … Continue Reading

Canadian Securities Administrators are seeking comments on soliciting dealer arrangements

The Canadian Securities Administrators (the “CSA”) have issued CSA Staff Notice 61-303 and Request for Comment – Soliciting Dealer Arrangements (the “Notice”) on the use of soliciting dealer arrangements. “Soliciting dealer arrangements” generally refer to agreements entered into between issuers and investment dealers under which the issuer agrees to pay to the dealers a fee for each security successfully solicited to tender to a bid in the case of a take-over bid, or to vote in favour of a matter requiring securityholder approval. In many cases, the payment of any fee is contingent on “success” and/or … Continue Reading

Trends in Environmental Social Governance

Corporations are facing increasing pressure to offer more transparency and disclosure with respect to their governance practices that promote environmental and social sustainability. This year’s trends in Environment Social Governance (ESG) in the context of Canadian corporate governance indicate that more and more corporations are including ESG as part of their core mandates and that investors are looking and asking for more ESG-related disclosures in making investment decisions.

What is ESG?

ESG is a general term used in the capital markets referring to non-financial performance indicators including sustainability, ethics and corporate governance factors, which measure the sustainability and … Continue Reading

Governance Oversight – Is Your Board An Active One?

In a recent interview with Christopher P. Skroupa on Forbes.com, Walied Soliman (Chair of Norton Rose Fulbright Canada, LLP and Co-Chair of Norton Rose Fulbright’s Canadian special situations team) weighs in on what it means to be an active director. The interview can be viewed here.

Stay connected with Special Situations Law and subscribe to the blog today.Continue Reading

Ignoring board gender diversity is no longer an option

Discussions around board gender diversity are picking up steam in the lead up to the 2018 proxy season. Some of the leading proxy advisory firms, namely the Institutional Shareholder Services (ISS) and Glass Lewis & Co. LLC (Glass Lewis), appear to have caught wind of the discussions – both firms added a voting policy in respect of board gender diversity to their 2018 proxy voting guidelines for Canada.

The discussions around board gender diversity are not new. In late 2014 (and as reported on this blog), the Canadian Securities Administrators (CSA) published ‘comply or Continue Reading

Glass Lewis’ 2018 Canada Policy Guidelines on Proxy Advice

Glass, Lewis & Co., LLC (Glass Lewis), a leading governance and proxy voting firm, has recently released its 2018 Policy Guidelines for Proxy Advice in Canada.  The following are three of its key changes from the 2017 Policy Guidelines:

Board Gender Diversity

In the new year, Glass Lewis will not make voting recommendations solely on the basis of board diversity. However, starting in 2019, Glass Lewis claims that it will generally recommend voting against the nominating committee chair of a board that has no female members, or has not adopted a formal written gender diversity policy. This … Continue Reading

5 Key Developments in Canadian Corporate Governance Rules in 2017

Members of Norton Rose Fulbright’s Canadian Special Situations team have published an article on the firm’s website highlighting key developments in Canadian corporate governance rules in 2017. The article can be found here: http://www.nortonrosefulbright.com/files/ca-5-key-developments-in-canadian-corporate-governance-rules-in-2017-161267.pdf.

Stay connected with Special Situations Law and subscribe to the blog today.

 … Continue Reading

Overboard, under deliver?

We recently reported that Institutional Shareholder Services (ISS) released its 2018 Americas Proxy Voting Guidelines Updates (the Policy Update), which, among other things, establishes modified guidelines for determining whether a director serving on the board of multiple public companies is “overboarded”.

Starting in 2019, ISS will recommend a withhold vote for (1) directors of TSX-listed companies who are CEOs and serve on two or more public boards and (2) any non-CEO director who serves on the board of five or more public companies.

Overboarding is a hot button topic in the realm of corporate governance. Questions arise … Continue Reading

ISS releases 2018 Americas Proxy Voting Guidelines Updates

On November 16, 2017, Institutional Shareholder Services (ISS) released its 2018 Americas Proxy Voting Guidelines Updates (the Updates). These updates implement changes in a number of areas, with the most significant being a gender diversity policy and new criteria for determining when a director is “overboarded”. Except where indicated below, the changes are effective for meetings held on or after February 1, 2018.

Gender Diversity

The Updates implement ISS’s proposal, in its 2018 Benchmark Policy Consultation, to implement a gender diversity policy. For S&P/TSX Composite Index companies, ISS will generally recommend a withhold vote for … Continue Reading

Management diversity: will targets and quotas improve gender diversity?

On October 5, 2017, the Canadian Securities Administrators (CSA) released Staff Notice 58-309 (Staff Notice) reporting findings of a review carried out by various Canadian securities regulators of disclosure regarding women on boards and in executive officer positions by TSX issuers, as prescribed in National Instrument 58-101 Disclosure of Corporate Governance Practices. We previously reported on the introduction of disclosure requirements in 2014.

The findings are generally positive, and have shown that gender diversity of boards is improving. The review has found that the total board seats occupied by women has increased from 11% in … Continue Reading

Environmental, social and governance (ESG) practices are paving their way into the mainstream

As discussed in our earlier blog post, the Kingsdale Advisors’ (Kingsdale) annual Proxy Season Review for 2017 identified ESG trends as one of several issues on the horizon for public companies. Kingsdale noted that heightened scrutiny from investors could translate into a demand for enhanced disclosure on the part of issuers.

The three factors that form ESG are integrated into investment analyses to determine the sustainability and future financial performance of companies. These factors are also used as tools by companies to analyze, evaluate and to better understand the overall risks and opportunities that their businesses are … Continue Reading

Trends and predictions in Canadian proxy contests

Kingsdale Advisors (Kingsdale) recently released its annual Proxy Season Review for 2017. The report examines trends observed in 2017 and provides analysis on what the future may hold for Canadian proxy contests. The report also outlines strategic recommendations for Canadian companies.

Looking back – trends from 2017

  • Shareholder activism: alive and well. Kingsdale reports that despite a drop-off in the number of public campaigns so far in 2017 (21) as compared to 2015 (55) and 2016 (33), the number of public campaigns to-date demonstrates the continued prevalence of activism in Canada with respect to public companies. The
Continue Reading

Expect the unexpected: what boards can do to plan for crises

As a standard precaution, boards should take steps to handle potential crises before one arises. This is particularly so in light of the increasing risk of cybercrime and privacy breaches, and the broader impact of negative social media attention faced by all companies for a variety of reasons today.

According to a recent article in the Harvard Law School Forum of Corporate Governance and Financial Regulation, 65% of CEOs say that their companies have experienced a crisis in the past three years. In the article, Paula Loop discusses how boards can adequately prepare for a potential crisis in order to … Continue Reading

Investors heating up the conversation on climate change

Shareholders are placing increased value on non-financial factors when making investment decisions. Some of these factors are environmental and social issues. In particular, shareholder proposals on climate change have recently gained some traction.

In 2016, a record breaking number of climate change resolutions were filed. This shift in focus is attributed to the 2015 Paris Accord, where 195 nations committed to take measures to mitigate global warming. The accord’s objective was to garner a global response to climate change, and it succeeded in enlisting a pledge from these nations to limit temperature increases to well below 2 degrees Celsius.

Interestingly, … Continue Reading

How independent are independent directors?

Board independence is a pillar of good corporate governance. It ensures that a corporation’s management is properly monitored and that the corporation’s decisions effectively balance the various stakeholders’ interests. Over the past decades, Canadian regulators (with support from investors) have required companies to increase the number of independent directors on their boards and have created stricter requirements for what qualifies as ‘independent’. But are independent directors now truly independent?

In a US paper published by Kastiel and Nili, the authors argued that independent directors today, while technically independent, are functionally still very dependent on management. This is because of the … Continue Reading

The CCGG’s stewardship principles

Last month, the Canadian Coalition for Good Governance (CCGG) published its new Stewardship Principles paper designed to assist institutional investors fulfil their responsibilities to their beneficiaries or clients and enhance the value of their investments. The principles reflect what the CCGG believes are appropriate stewardship responsibilities for institutions investing in Canadian public equities and are directed to both asset owners and asset managers. While it is not the institutional investor’s role to manage the public companies in which it invests, in order to fulfil its role as fiduciary to its beneficiaries and clients, the CCGG believes an institutional … Continue Reading

Making your vote count II: CSA finalizes proxy voting protocols

The Canadian Securities Administrators (CSA) have recently released finalized guidance and protocols for meeting vote reconciliation under CSA Staff-Notice 54-305 Meeting Vote Reconciliation Protocols (the Protocols) which are implemented on a voluntary basis. The Protocols mark the latest step in a systemic review that began in 2013 to bring greater transparency and simplicity in vote tabulation specifically for shares held through intermediaries.

As discussed in our previous update, the Protocols are primarily intended to address the issue that all votes of beneficial holders are properly tabulated to ensure that true beneficial holders can exercise their right … Continue Reading

Glass Lewis’ 2017 Canada policy guidelines

Towards the end of last year, Glass, Lewis & Co., LLC (Glass Lewis), a leading governance and proxy voting firm, released its 2017 Proxy Paper Guidelines for Canada (the Guidelines) for the upcoming 2017 proxy season.  Although the Guidelines contain changes compared to the guidelines released by Glass Lewis in 2016, most were foreshadowed in the 2016 guidelines so should come as no surprise.  The key changes are detailed below.

Director Overboarding

When making recommendations in relation to directors, Glass Lewis will generally recommend voting against (a) a director who is an executive of any public … Continue Reading

Board watch: more complexity, more committees

As a result of the increasing and ever-evolving responsibilities falling on the shoulders of boards of directors, the traditional three key committee model (covering audit and financial reporting, executive compensation, and director nominations and board succession planning) can be inadequate. The creation of additional committees has been one way to manage the burden.  According to EY in its recent Board Matters post entitled “Board committees evolve to address new challenges”, the prevalence of additional committees reflects “changing board priorities and pressures, boardroom needs and company circumstances.”

The statistics support this: more than 75% of S&P 500 companies have … Continue Reading

Institutional investors managing US $17 trillion announce new corporate governance framework

In a move likely to have significant impacts on corporate governance, a group of institutional investors managing upwards of US $17 trillion has announced the formation of the Investor Stewardship Group (the Group). The Group has adopted a framework of certain non-binding investor-friendly principles, many of which are either common or already legally recognized in Canada, illustrating one of Canada’s greatest attractions as an investment destination: its strong protections of investor rights. On the other hand, the Group takes a skeptical view of a common practice in Canada: dual-class share structures.

The Group

The Group is a collective of … Continue Reading

An age of shareholder empowerment

In a corporate directors survey (the Survey) entitled “The swinging pendulum: Board governance in the age of shareholder empowerment”, PricewaterhouseCoopers LLP (PwC) presents current trends in investor influence and their impact on governance practices of boards and management teams.

Conducted amongst 884 company directors in the summer of 2016 with respondents representing over 24 industries, the Survey highlights the increasing influence of investors and board sentiment in this “new age of shareholder empowerment”.

Board composition

When recruiting new board members, investor recommendations appear to carry increasing weight. The Survey notes that there has been an … Continue Reading

Corporate governance, in Silicon Valley and beyond

The best practices and processes through which companies manage their corporate affairs have long been analyzed and discussed under the “corporate governance” umbrella.  Corporate governance practices and trends among large public companies are often presented as a benchmark for all companies.  Less often discussed are the industry-specific practices tailored by companies to fit their businesses.

One Silicon Valley law firm, Fenwick & West LLP (Fenwick), has taken a closer look at these differences.  Fenwick collects and compares data on the corporate governance practices of large publicly traded companies and technology and life science companies via an annual survey.  … Continue Reading

Federal government proposes changes to corporate law: What it means for corporate governance and shareholder activism

On September 28, 2016, Canada’s federal government introduced a bill proposing amendments (the Amendments) to the Canada Business Corporations Act (the CBCA), among other acts. The Amendments include new requirements for electing directors, mandatory diversity disclosure, and changes to shareholder communications. These proposed changes, if enacted, will have significant effects on corporate governance and shareholder activism in Canada. Here are some of the key things issuers and investors will need to know.

 Election of directors

 The Amendments introduce several changes to the election of directors. They will require publicly traded corporations, with some prescribed exceptions, to:

  • hold
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