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designed to give a voice to investor con- cerns in the regulator's policy-making process. The panel's chair, Anita Anand, who is also a professor at the Univer- sity of Toronto's Faculty of Law, says it "seems incomprehensible" that majority voting has not already been adopted, and says the practices of the largest issu- ers are not necessarily reflective of all companies. "Corporations that are listed on the S&P/TSX index may have major- ity voting in place but this is unlikely pervasive practice among all listed com- panies in my view, especially in small- to medium-size firms," she says. "In our view, there is value in legally mandating certain corporate governance mecha- nisms, such as majority voting, so that the same practice is implemented by all firms." Magna International Inc., recently Tradition Business A of Whether conducting business in Canada or across the globe, Aird & Berlis LLP understands the realities of your work. Our clients benefit from the firm's solid relationships with major institutions, government authorities and renowned national and international law firm affiliates. We combine the depth and strength of Canada's largest firms with the creativity and effectiveness of smaller firms. Count on us for legal counsel from a business perspective.® Eldon Bennett Managing Partner ebennett@airdberlis.com 416.865.7704 adopted a majority voting policy, and it will be used for the first time at its 2012 annual general meeting. Directors with a withheld vote above 50 per cent have to resign, but Bassem Shakeel, the company's vice president and secretary, insists the board must retain discretion over whether to accept the resignation. He says otherwise strong candidates can fall foul of strict guidelines employed by proxy advisory firms, to whom many investors outsource their voting deci- sions. For example, Shakeel says a proxy advisory firm may suggest a withheld vote for a director who has missed a certain number of board meetings, without taking into account the reasons for the absences. "There may have been a good and valid reason, but the rigid application of the rule could result in a good director who is truly looking after shareholders getting turfed, and that's clearly not in their best interests," he says. Andrew MacDougall, a partner at Brookfield Place, 181 Bay Street T 416.863.1500 F 416.863.1515 Suite 1800, Box 754 Toronto, ON M5J 2T9 www.airdberlis.com Osler Hoskin & Harcourt LLP, served as counsel to an Institute of Corporate Directors task force on shareholder democracy. The task force expressed con- cerns that majority voting could result in failed elections that leave boards without enough directors to function properly. Smaller companies, in particular, could be hit hard by rejected nominees, accord- ing to MacDougall, who suggested they be excluded from any rule mandating majority voting. "There's smaller issu- ers that are having enough difficulty attracting directors of the calibre they need to be able to take it to the next level. It just adds another impediment or difficulty and a smaller company in growth mode probably doesn't need that added burden," he says. "If you get a large withhold vote against, you know there's something concerning shareholders that is worth investigating, but when you get to majority voting standard, it doesn't add any more information to the board, it just adds some additional challenges. I think it's important that there be an 20 • OCTOBER 2011 ntitled-2 1 INHOUSE 8/25/11 12:01:27 PM