Canadian Lawyer InHouse

MARCH 2017 42 INHOUSE By Caroline Moreau In Closing I n today's modern business world, the topic of women's representation on boards of directors and in senior management within reporting is- suers is certainly newsworthy. In the fall of 2016, shortly after the Canadian Securities Ad- ministrators published the results of their analysis as to the implementation of requirements for disclosure by non-venture issuers, (Notice 58-308), Bill C-25 was fi led. Bill C-25 amends the Canada Business Corpora- tions Act by requiring distributing corporations to disclose information pertaining to diversity among directors and members of the senior management to its shareholders. Recall that at the end of 2014, National Instru- ment 58-101 -Disclosure of Corporate Governance Practices was amended by new provisions as to the rep- resentation of women sitting on boards and occupying executive offi cer positions of non-venture issuers. The goal was to introduce "comply or explain" require- ments to encourage gender diversity on boards and within senior management. In June 2016, Catalyst Canada published a report re- garding diversity within boards in Canada. The report generally leads to the conclusion that the measures in place are not yielding the desired effects. Eleven recommendations to accelerate progress in this area have been proposed, which include reaching a target of 30 per cent women on boards for all issuers that cur- rently have at least one woman director and one wom- an director for all issuers that currently have no women on their board within a period of three to fi ve years. The recommendations of the report are more de- manding than the model proposed by the CSA in that they are specifying clear target percentages as well as indicating clear timelines for achieving targets. These recommendations have since been adopted by the Gov- ernment of Ontario. Following the report, the Ontario Securities Commis- sion has indicated in Notice 11-775 its intent to focus on gender diversity and to monitor the progress of disclosure requirements related to the gender diversity regime. In September 2016, the analysis of the concrete impacts of the measures introduced by NI 58-101 on the status of gender diversity reveal that there is still signifi cant room for improvement. CSA stated in No- tice 58-308 that, overall, 12 per cent of all the sampled board members composition was women, versus 11 per cent in 2015. In addition, 55 per cent of the issuers had at least one woman on their board. If this statistic rep- resents an improvement of six per cent from 2015, it sheds light on the fact that 45 per cent of the boards had no woman as director. When reading Notice 58-308, the reader cannot help but sense an underlying disappointment in the modest progress that has resulted from the amendments that were made to NI 58-101 two years ago. Comment- ing on the low number of women fi lling board vacan- cies, Maureen Jensen, chairwoman and CEO of the OSC, said that "without an improvement here, we will never reach 30 per cent female board representation." While the CSA was assessing the impacts of the amendments to NI 58-101, the diversity disclosure reporting requirements were launched at the federal level with Bill C-25. The proposed amended CBCA regulations currently indicate that the information respecting gender diversity required by NI 58-101 need to be disclosed at every annual shareholder meeting, which basically means that the CSA "comply or explain" model is duplicated. However, the notion of "diversity" encompasses more than gender alone as information respecting diversity other than gender is required to be disclosed. The scope of diversity is, therefore, broader than in NI 58-101. The implementation of quotas to make the repre- sentation of women more prominent has also been dis- cussed by many, but it has yet to be confi rmed as part of the legislation or regulations. It will certainly be inter- esting to follow the evolution of this bill in correlation with the quantifi able data that has been compiled since the implementation of the CSA "comply or explain" model in 2014. IH Women on boards and the 'comply or explain' rule Report specifi es clear target percentages and clear timelines for achieving targets. Caroline Moreau is legal adviser at National Bank of Canada.

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