TSX Gets Back Into Governance Regulation
On September 9, 2011, the
TSX issued for comment proposed amendments to its listing requirements which
would require listed issuers to:
- have annual elections for all directors;
- provide for proxy voting for directors on an individual
disclose in their proxy materials whether the issuer
has adopted a majority voting policy for directors and, if not, explain why
notify the TSX if a director of a listed issuer which
does not have a majority voting policy receives a majority of “withhold” votes.
Most TSX listed issuers
already provide for individual voting for directors and annual director terms;
these two proposals will likely be non-controversial for issuers whose listed
securities carry a right to vote for the election of directors. It is also not onerous to require such
issuers to disclose whether they have adopted a majority voting policy or explain
why not. Indeed, the TSX states that,
according to the Canadian Coalition for Good Governance, 57% of the issuers
listed in the S&P/TSX Composite Index have already adopted such a policy. However, the proposal that a listed issuer
which does not have a majority voting policy should notify the TSX if one of
its directors receives a majority of "withhold" votes so that the TSX
may then follow up with the issuer and the director is somewhat surprising.
This is the TSX’s first
foray into the regulation of corporate governance practices since the TSX’s
rules were supplanted by instruments issued by the Canadian Securities
Administrators (CSA) six years ago.
Although the first three proposals are worthy initiatives, the TSX may
not be the best positioned to implement regulatory changes in these areas given
its limited range of enforcement tools and the fact that proxy circular
disclosure requirements have otherwise been consolidated into a CSA
instrument. The TSX has requested that
comments on these initiatives, including whether they should be pursued by
other organizations, be delivered by October 11, 2011.