Canadian public companies to face tougher board gender diversity requirements

February 12, 2021

The Northern Miner reports that leading proxy advisory firms will bring stricter board gender diversity guidelines to Canadian public companies from 2022.

From February 1, 2022, Institutional Shareholder Services (ISS) will require S&P/TSX Composite issuers’ boards to have a minimum 30% representation of women or an actionable gender diversity plan set out over a “reasonable” timeframe to achieve this percent. “Widely held” companies that aren’t on the index who have no female representation on the board and have no written gender diversity policy will face a withhold vote against their nominating committee chair.

Glass Lewis, on the other hand, will require all TSX-listed issuers to have a minimum of two female directors as of January 1, 2022, and if a board has six or fewer members, it will continue to be required to have a minimum of one female director.

Co-head of Torys’ Capital Markets practice Rima Ramchandani spoke to The Northern Miner about these approaching changes.

“Impacted companies have this year to get prepared or revisit their board composition and policies in anticipation of the new guidelines that will kick-in the following year,” she said.

Rima continued on to discuss how the changes illustrate the increasing attention investors have placed on public companies’ board diversity and while it has been seven years since the Ontario Securities Commission implemented a “comply or explain” rule—which required companies to disclose gender diversity statistics—issuers haven’t progressed as much as they should have.

“Even in the TSX Composite index…. there’s still a big percentage of those issuers that haven’t gone as far as I think the institutional investor community would like,” Rima said.

Rima also pointed out that the focus on board gender diversity will continue to heighten in the coming years.

“This is all burbling and I expect we’ll continue to see focus on this from regulators or lawmakers, and ultimately proxy advisory firms,” she said.

Associate Carly Klinkhoff also spoke to the publication about the potential impact these guidelines could have on the mining industry. 

“There is a disparity that exists currently in terms of issuers in the mining space versus the TSX more broadly,” she said.

“I think it will be interesting to see over the next year whether there’s some movement there, because I think mining issuers have a longer way to go.”

To find out more about these guidelines, read our bulletins “ISS releases new diversity proxy guidelines: S&P/TSX Composite Index companies expected to adopt a 30% target for women on boards” and “Glass Lewis releases its 2021 proxy voting guidelines”.


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