Advancement of Women on Boards and in Executive Positions Remains a Work in Progress, CSA Reports

The number of women on boards and in Chief Executive Officer or Chief Financial Officer positions has risen compared to last year; however, the overall advancement of gender diversity remains a work in progress, as found by the Canadian Securities Administrators (CSA) in their recently published CSA Multilateral Staff Notice 58-311 Report on Fifth Staff Review of Disclosure Regarding Women on Boards and in Executive Officer Positions (Notice). The Notice continues the review, for a fifth year, of “comply or explain” disclosure provided by non-venture public companies concerning the representation of women on boards and in executive positions, as set out in Form 58-101F1 Corporate Governance Disclosure (Form). For more information on the CSA’s similar sets of review, see our October 2018 Blakes Bulletin: Women on Boards: Progress on Gender Diversity Still Slow, CSA Reports.

FIFTH-YEAR REVIEW RESULTS

The Notice continues the review of the compliance with gender diversity disclosure requirements for 641 issuers with financial year-ends between December 31, 2018, and March 31, 2019 (thereby omitting large Canadian financial institutions with October 31 year-ends). As in prior years, progress has been made for the representation of women on boards and in executive positions; however, the overall pace of change has remained slow. The Notice found mostly positive improvements from the findings of the fourth-year review, as follows:

• Overall percentage of board seats occupied by women increased from 15 per cent to 17 per cent as compared to the prior year (11 per cent four years ago), increasing in all size categories of issuers, with the 46 largest issuers leading the way at 27 per cent (up from 25 per cent in the prior year and 21 per cent four years ago)
• 525 vacant board seats were filled during the year, with 33 per cent of the new directors being women (up from 29 per cent in the prior year)
• 27 per cent of issuers did not have a woman on their boards, down from 34 per cent in the prior year (51 per cent four years ago)
• 5 per cent of issuers had a woman as the chair of the board
• 64 per cent of issuers disclosed having at least one woman in an executive officer position, down from 66 per cent in the prior year (60 per cent four years ago)
• 50 per cent of issuers disclosed they had adopted a policy relating to the identification and nomination of women directors, an increase of eight per cent compared to 42 per cent in the prior year (15 per cent four years ago), and issuers with such a policy had a greater overall percentage of board seats occupied by women (21 per cent) as compared to issuers without such policies (13 per cent)
• 22 per cent of the issuers had targets for the representation of women on their boards, an increase from 16 per cent in the prior year (7 per cent four years ago), with 4 per cent of issuers having a female Chief Executive Officer (also 4 per cent in the prior year) and 15 per cent having a female Chief Financial Officer (14 per cent in the prior year)
• Issuers with board targets had, on average, female board representation of 24 per cent, compared to 15 per cent for issuers that did not have a target

REGULATORY RESPONSES

In light of the experience derived from the past five annual reporting periods, the CSA has engaged in consultations, research and disclosure reviews and continues to consider, in particular, whether further changes to the disclosure requirements in the Form and introduction of new or supplemental guidelines regarding corporate governance practices in National Policy 58-201 Corporate Governance Guidelines are warranted. To date, no decisions have been made.

The CSA’s “comply or explain” disclosure regime has recently been broadened to require disclosure on further aspects of diversity at public companies incorporated under the Canada Business Corporations Act (CBCA), with the coming into force of certain amendments to such statute and corresponding regulations. For more information on the CBCA’s amendments coming into effect on January 1, 2020, see our July 2019 Blakes Bulletin: Additional Diversity Disclosure Required of CBCA Corporations in 2020.

CONCLUSION

Progress continues to be slow in the fifth year since the Form was amended to require gender diversity disclosures. Although momentum may be building as investors continue to pressure issuers to, in particular, add more women to their boards, regulators continue to consider further measures to increase the representation of women on boards and in executive officer positions.

For further information, please contact:

Stacy McLean               416-863-4325

Matthew Merkley           416-863-3328

or any other member of our Corporate Governance group.