Barbara Shecter | Aug 22, 2012 7:26 AM ET | Last Updated: Aug 22, 2012 7:36 AM ET
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The pressure is on for companies listed on the Toronto Stock Exchange to consider adopting individual director voting and majority-voting policies, according to lawyers at Toronto law firm Blakes.

That’s because the Ontario Securities Commission issued an annual report this week indicating the regulator is considering specific policy initiatives that would strengthen the role of shareholders in uncontested director elections.

More specifically, the Blakes report by lawyers Matthew Merkley and John Tuzyk says the OSC indicates it supports proposals made by the Toronto Stock Exchange (TSX) last September that would increase the accountability of directors to shareholders and add transparency to shareholder meetings. The TSX proposals create a “comply or explain” disclosure-based regime with respect to majority voting for the election of directors.

The OSC’s annual report also discloses that the country’s biggest capital markets regulator and the TSX are discussing what further steps need to be taken to ensure that all TSX-listed issuers adopt majority-voting policies within a reasonable time-frame.

“Although a specific timeline is not provided, the Annual Report provides further insight on the OSC’s intentions concerning potential reforms to the regulation of director elections and increases the pressure for, at least, TSX-listed issuers to consider adopting individual director voting and majority-voting policies,” the Blakes lawyers wrote.

Many large companies in Canada have voluntarily adopted shareholder democracy policies that give investors a “say on pay” and allow for individual rather than slate voting for directors, thus giving shareholders the power to influence compensation decisions and vote against specific board members. But investor advocacy groups such as the Canadian Coalition for Good Governance have been pushing for wide-spread mandatory acceptance of such policies, and hoped the OSC would lead the reform.

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Topics: FP Street, Legal Post, Canadian Coalition for Good Governance, Ontario Securities Commission, Toronto Stock Exchange, TSX

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