OSC draft rules aim to promote gender diversity for companies
By Sandra Rubin
WHEN KATHLEEN TAYLOR was named incoming chairman of Royal Bank of Canada, the decision to put a woman at the helm of a blue-chip Canadian company was so unusual it made national headlines. That may not be the case much longer — at least not for the more than 1,000 corporations whose shares trade on the Toronto Stock Exchange.
TSX-listed companies are automatically reporting issuers in Ontario, answerable to the Ontario Securities Commission. And the government of Premier Kathleen Wynne has asked the OSC to draft new disclosure rules specifically designed to promote gender diversity.
Under the securities regulator's blueprint – which was in the comment phase until early October – new rules would require TSX-listed companies to reveal the number of women on their board of directors, in their executive ranks and across their workforce. Compliance is voluntary, but those that choose not to comply will have to explain why not — a system known as “comply or explain.”
Companies will also be asked to divulge whether they have a formal policy on advancing women in the senior ranks. If they do, they will be required to disclose how it works — and whether it's working. If not, they'll have to explain why not, and identify both risks and lost-opportunity costs associated with that decision. The answers become part of the company's annual governance reporting.
Alex Johnston, executive director of Catalyst Canada, an organization that promotes women in business, calls the proposal a “game changer,” saying it creates “a real momentum shift.”
Johnston, a former M&A practitioner at Goodmans LLP, says studies by Catalyst and others show Canada falling behind jurisdictions such as the US, UK and Australia. “The world has changed. I think people started getting nervous about being seen as a laggard in this area. Forty-six per cent of public companies in Canada have zero women on their boards, FP500 companies zero. They've got to start moving down this path.”
Patrice Walch-Watson, a partner at Torys LLP, says some may view the proposal as controversial.
“A certain percentage of people are saying: ‘We don't see any need for this. We look at qualified members for our board, we have our process, and we're satisfied with who we get.'
“Others say this is a good first step, but board diversity is broader than just gender. So I think there is going to be discussion around those pieces, and also around the notion of comply or explain. There are people who believe it has no teeth and that if you're serious about this, you should design something with teeth.”
While many countries, such as the US and UK, have similar regimes, others including Belgium, France, Italy and Norway have gone for real bite, combining quotas for women with repercussions ranging from fines to nullifying board elections for those companies that fail to comply. Johnston says “comply or explain” feels like a very Canadian approach.
“That said, the risk is making sure this is not a box-ticking exercise, that it really leads to a thoughtful discussion around the board table about connecting supply to demand in a way that we have not yet had in a Canadian context. This is not a supply problem. It's a demand issue.”
Sandra Rubin is a legal-affairs writer and regular contributor to Lexpert.
By Sandra Rubin
WHEN KATHLEEN TAYLOR was named incoming chairman of Royal Bank of Canada, the decision to put a woman at the helm of a blue-chip Canadian company was so unusual it made national headlines. That may not be the case much longer — at least not for the more than 1,000 corporations whose shares trade on the Toronto Stock Exchange.
TSX-listed companies are automatically reporting issuers in Ontario, answerable to the Ontario Securities Commission. And the government of Premier Kathleen Wynne has asked the OSC to draft new disclosure rules specifically designed to promote gender diversity.
Under the securities regulator's blueprint – which was in the comment phase until early October – new rules would require TSX-listed companies to reveal the number of women on their board of directors, in their executive ranks and across their workforce. Compliance is voluntary, but those that choose not to comply will have to explain why not — a system known as “comply or explain.”
Companies will also be asked to divulge whether they have a formal policy on advancing women in the senior ranks. If they do, they will be required to disclose how it works — and whether it's working. If not, they'll have to explain why not, and identify both risks and lost-opportunity costs associated with that decision. The answers become part of the company's annual governance reporting.
Alex Johnston, executive director of Catalyst Canada, an organization that promotes women in business, calls the proposal a “game changer,” saying it creates “a real momentum shift.”
Johnston, a former M&A practitioner at Goodmans LLP, says studies by Catalyst and others show Canada falling behind jurisdictions such as the US, UK and Australia. “The world has changed. I think people started getting nervous about being seen as a laggard in this area. Forty-six per cent of public companies in Canada have zero women on their boards, FP500 companies zero. They've got to start moving down this path.”
Patrice Walch-Watson, a partner at Torys LLP, says some may view the proposal as controversial.
“A certain percentage of people are saying: ‘We don't see any need for this. We look at qualified members for our board, we have our process, and we're satisfied with who we get.'
“Others say this is a good first step, but board diversity is broader than just gender. So I think there is going to be discussion around those pieces, and also around the notion of comply or explain. There are people who believe it has no teeth and that if you're serious about this, you should design something with teeth.”
While many countries, such as the US and UK, have similar regimes, others including Belgium, France, Italy and Norway have gone for real bite, combining quotas for women with repercussions ranging from fines to nullifying board elections for those companies that fail to comply. Johnston says “comply or explain” feels like a very Canadian approach.
“That said, the risk is making sure this is not a box-ticking exercise, that it really leads to a thoughtful discussion around the board table about connecting supply to demand in a way that we have not yet had in a Canadian context. This is not a supply problem. It's a demand issue.”
Sandra Rubin is a legal-affairs writer and regular contributor to Lexpert.
