CANADA Trends and Developments Contributed by: Bill Gilliland, Dentons
Increasingly, governance ratings organisations and industry groups developing “best practic- es” are focusing on gender and other diversity measures as critical elements of measuring/ rating corporate governance. See, for example, the Canadian Coalition for Good Governance (CCGG) and The Globe and Mail Board Games. Proxy advisory firms are following suit, with both Glass, Lewis & Co (Glass Lewis) and Institution - al Shareholder Services (ISS) adopting gender diversity policies in respect of Canadian public corporations (regardless of jurisdiction of incor - poration). Glass Lewis has updated its voting policies with respect to board gender diversity effective for shareholder meetings on or after 1 January 2025, as set out below. • Glass Lewis maintains a percentage-based approach to board gender diversity and will generally recommend voting against the nominating committee chair of any TSX- listed company board that is not at least 30% gender diverse, as well as all members of the nominating committee of a board with no gender diverse directors. Glass Lewis defines “gender diverse directors” as women and directors that identify with a gender other than male or female. • For companies listed on junior exchanges, Glass Lewis’ minimum threshold remains at one gender diverse director. • Glass Lewis may refrain from recommend - ing that shareholders vote against the elec - tion of directors of companies when boards have provided a sufficient rationale or plan to address the lack of diversity on the board.
Beginning with shareholder meetings held after 1 February 2025, the ISS voting guidelines have changed as follows. • ISS will recommend against the election of the chair of the nominating committee, or its equivalent, of a company listed on the S&P/ TSX Composite Index with less than 30% representation of women on its board of directors. • ISS has amended one of the exceptions to the requirement that boards of S&P/TSX Composite Index issuers be comprised of at least 30% women. Assuming there is a pub - licly disclosed written commitment to achieve 30% representation of women on the board at or before the subsequent annual general meeting (AGM), an exception will be made for companies that have fallen below the 30% threshold after achieving such level at the preceding AGM. • Previously, companies could only take advan - tage of this exemption if they fell below the 30% threshold due to an extraordinary cir - cumstance. ISS has now removed the refer - ence to “extraordinary circumstances” . • For TSX-listed companies which are not also included in the S&P/TSX Composite Index, ISS will generally vote against the election of the chair of the nominating committee, or its equivalent, if there are zero women on the board of directors. In 2024, ISS broadened its policy on diversity beyond gender to include requirements for racially and/or ethnically diverse board members (defined as Aboriginal peoples, meaning persons who are indigenous, Inuit or Métis, and members of visible minorities, meaning persons other than Aboriginal peoples, who are non-Caucasian in race or non-white in colour).
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