“Comply or Explain” – What is the Status of Women’s Representation on Corporate Boards of Directors?

On December 31, 2014 the amendments to Regulation 58-101 respecting Disclosure of Corporate Governance Practices (“Regulation 58-101”) were implemented. On September 28, 2015, the Canadian Securities Administrators published CSA Multilateral Staff Notice 58-307 – Staff Review of Women on Boards and in Executive Officer Positions (the “Notice”) which summarizes the findings and conclusions from the analysis of the information provided by more than 700 reporting issuers.

As indicated in a previous bulletin, Regulation 58-101 requires non-venture issuers to annually provide information on the number and percentage of women on the issuer’s board of directors or in an executive officer position, on mechanisms of board renewal and on targeted policies and goals for increasing the participation of women on boards and in senior management.

The principal findings were as follows:

• 51% of reporting issuers had no women on their board;
• 40% had no women in an executive officer position;
• 65% had not adopted a written policy for identifying and nominating women directors;
• 60% of issuers with a market capitalization above $2 billion had two or more female directors;
• 15% added one or more women to their board between December 31, 2014 and March 31, 2015;
• 19% set term limits for directors, while 56% adopted other board renewal mechanisms. 

It is evident from the content of the Notice and the comments therein that too few issuers adopted written policies on identifying and selecting candidates for directorships, or took steps to implement such policies. Certain business sectors, such as oil and gas, technology, biotechnology, hospitals and environmental industries had the lowest adoption rates, i.e. less than 10%.

The Notice also indicates that the information provided regarding the adoption of written policies did not systematically respect the provisions of Regulation 58-101. Examples of the information to be provided are set out in the Notice.

Some recommendations are made in the Notice as to the proper method of disclosing figures regarding the number of women on the board and in senior management, particularly by providing information on previous years as well, in order to follow the evolution of their representation and demonstrate the clarity of continuous disclosure information to investors and shareholders, which would simplify disclosure over the years and promote the achievement of the representation targets by the corporations concerned.

It is evident that issuers need and will continue to need more guidance regarding the level and degree of detail of the disclosure necessary to satisfy the requirements of Regulation 58-101. It is also noteworthy that there is no mention in the Notice of any impetus to impose quotas for women’s representation on boards and in senior management.

The publication of the Notice comes only nine months after the coming into force of Regulation 58-101. An update of the conclusions of the Ontario Securities Commission’s round table should follow in early 2016 and is eagerly anticipated. The evolution of disclosure practices should be monitored closely over the coming year, as well as the progress made by issuers regarding the representation of women on boards of directors and in senior management.