“Comply & Explain in Canada – One Year On” by Michèle McCarthy

A year ago, the Ontario Securities Commission and certain provincial securities regulators signed on to amendments to National Instrument 58-101, Disclosure of Corporate Governance Practices, that required disclosure by non-venture issuers of the number of women on their boards of directors and in the ranks of senior management. This disclosure requirement made it possible to track the level of compliance by the TSX-listed corporations in Canada. The OSC has just released a report on the level of compliance and hosted a thought-provoking roundtable to discuss the results (soon to be available in transcript form). Both are important reading. While some might be disheartened by the results showing the mining and oil/gas sectors lagging significantly (with 60% or more respondents having no women on board), a starting point has now been established.

While no Canadian regulatory authority has advocated quotas, targets are becoming more palatable. Every business sets targets (stretch and others) and then makes plans to achieve them. By reporting these statistics, the OSC has set the baseline and can now challenge companies to put more women on boards. The report highlighted current explanations for non-compliance including a lack of meritorious applicants and a need for corporate flexibility. Those responses will not stand the test of time nor rigorous scrutiny. In the coming years, businesses will be measured by their level of compliance and may be found to be wanting by their stakeholders including their investor base. Their starting point should be to create a board-level corporate policy establishing targets.

The annual review done by Lord Davies of Women on Boards has had a remarkable effect in the UK with a noticeable increase in the number of women on the boards of FTSE 100 Companies. The OSC’s work will have the same effect.

You cannot achieve what is not measured. What gets measured gets done!

Michèle McCarthy
President McCarthy Law
mmccarthy@mccarthylaw.ca

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