Canadian Lawyer InHouse

By Ian Mitchell, Partner and Kim Lawton, Associate, WeirFoulds LLP New rules for director elections With proxy season around the corner, the focus of many public companies will turn to issues surrounding the election of directors. For companies listed on the Toronto Stock Exchange, there are new rules in place for director elections aimed at improving corporate governance. Board members will now have to grapple with efforts by regulators to bring director election practices in Canada up to the standards of other major international jurisdictions. This quiz surveys some of the situations public companies may have to navigate under the new rules. The current board of Public Co. (a TSX-listed issuer) are all friends from business school and would like to continue working together. One director, Ben D. Rules, does not enjoy a high level of shareholder support. If given the option, the shareholders would much prefer to elect Seymour Value to the board. In the past, shareholders haven't been able to add Value to the board because Public Co. used "slate-style" voting and he never made the management list. Will the shareholders be able to elect Value this year? (A) Yes (B) No (C) Maybe, it depends 1 The board of Public Co. hasn't decided whether to adopt a majority voting policy. They've been busy trying to finalize their financial statements in time for the annual general shareholder meeting. One board member, Justin Case, thinks they should "leave it open" and decide on the adoption of a majority voting policy after they see how the votes come in at the meeting. Should the board follow Case's lead? (A) Yes (B) No (C) Maybe, it depends 2 In accordance with TSX rules, Public Co. decides to hold an election on an individual basis that is not contested. One current and up-for-election board member is Ben D. Rules. He receives 4,000 "withhold" votes and 25 "yes" votes. Public Co. does not have a majority voting policy. Is Rules validly elected? (A) Yes (B) No (C) Maybe, it depends 3 Public Co. always counts the votes at its shareholder meetings by a show of hands. The proxy advisor, Mark Aldavotes, dutifully counts all 4,025 votes for the director elections. Rules is embarrassed about how poorly the vote went for him. In the past, Public Co.'s press officer, Rhoda Report, always skips the specific voting results and only indicates who was or was not elected to the board. Should Rules be relieved? (A) Yes (B) No (C) Maybe, it depends 4 Public Co. is incorporated under the Canada Business Corporations Act and has four members on the board of directors. The sole resident Canadian director, Aida Canuck, wants to resign from the board. Can she walk away? (A) Yes (B) No (C) Maybe, it depends 5 w w w. c a n a d i a n law y er m a g . c o m / i n h o u s e February 2013 • 15

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