CANADA Trends and Developments Contributed by: Bill Gilliland, Dentons
Transparency – Voting “For” or “Against” Directors of Public Corporations Canadian corporate statutes have historically required that shareholders either vote for or withhold their vote on the election of directors at annual meetings. This has meant that if a direc - tor receives just one vote for their election at an uncontested shareholder meeting, then that director will be elected, even if a vast majority of shares are withheld from voting for that director. Starting in 2014, all corporations listed on the TSX were required to adopt a majority voting policy pursuant to which each director must be elected by a majority of votes cast with respect to their election, except at a contested meeting. Majority voting policies must also require: • a director to immediately tender their res - ignation if they are not elected by at least a majority (50% +1 vote) of the votes cast with respect to their election; • the board to determine whether to accept the resignation within 90 days of the share - holder meeting, and the resignation should be accepted in the absence of exceptional circumstances; • the resignation to become effective when accepted by the board; • a director who tenders a resignation not to participate in board or committee meetings at which the resignation is considered; and • the issuer to promptly issue a news release with the board’s decision including, in the case of a board not accepting the resignation, the reasoning behind such a decision. On 31 August, 2022, amendments to the CBCA came into force that changed the majority vot - ing requirements for board nominees, as set out below.
ommendation for the advisory vote on executive compensation. The clawback provision should provide recoupment authority regardless of whether the employment of the executive officer was terminated with or without cause. The CCGG also encourages the use of clawback policies to monitor performance-based compen - sation. Transparency – Board Matters Glass Lewis has noted the importance of com - panies providing substantive disclosure about the experience and expertise of board nomi - nees. Where the disclosure of an issuer in the S&P/TSX 60 Index is not sufficient to allow for a meaningful assessment of the key skills and experience of incumbent directors and board nominees, Glass Lewis may recommend voting against the chair of the nominating committee, or its equivalent. Glass Lewis may now issue a negative voting recommendation in respect of the chair of the governance committee of a TSX-listed issuer, or the most senior member of the committee in the absence of a chair, if the governance commit - tee did not meet at least once during the year in review. ISS has clarified that former CEOs of a TSX- listed issuer will be deemed non-independent unless there are exceptional circumstances to reassess this classification after a minimum cooling-off period of five years. ISS will con - tinue to recommend against any director who has served as a former CEO and is a member of the audit or compensation committee unless ISS classifies such director as independent follow - ing the cooling-off period. This recommendation also applies to a director who has served as a CFO within the past three years.
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