TSX adopts changes to director elections and majority voting

David Weinberger -

The TSX today published notice that it is adopting amendments to its Company Manual that would require issuers to (i) elect directors annually; (ii) elect directors individually; (iii) publicly disclose the votes received for the election of each director; (iv) disclose whether a majority voting policy has been adopted and if not, explain the practices for electing directors and the reason for not adopting a majority voting policy; and (v) disclose to the TSX if a director receives a majority of "withhold" votes in the case that the issuer does not have a majority voting policy.

An earlier version of the proposals was published for comment in September 2011 and, according to the TSX, a majority of commenters supported the changes. The final amendments, which have been approved by the OSC, will come into force on December 31, 2012. Security holder meetings that have already been set and for which proxy materials have already been approved will be unaffected by the amendments.

The TSX also published for comment further proposed amendments to its Company Manual that would require issuers listed on the TSX to have majority voting for director elections at uncontested meetings. Issuers would be able to comply with the requirement by adopting a majority voting policy. A typical majority voting policy would provide that, while security holders could generally still vote "for" or "withhold" for each board nominee, a director who receives a majority of "withhold" votes would be required to tender his/her resignation, and the board would generally accept that resignation.

According to the Canadian Coalition for Good Governance, 61% of the listed issuers in the S&P/TSX Composite Index have adopted majority voting. The comment period closes on November 5, and the TSX anticipates that the amendments would become effective, subject to OSC approval, as of December 31, 2013.

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