On January 14, 2021, the Toronto Stock Exchange (“TSX”), Laurel Hill Advisory Group (“Laurel Hill”) and Fasken hosted a conversation on important disclosure and corporate governance considerations for issuers leading into the 2021 proxy season. The panel discussed four discrete areas of recent developments in corporate governance which companies should be aware of before this upcoming 2021 proxy season:

  1. An Update from Proxy Advisory Firms
  2. An Update from the TSX
  3. Diversity Disclosure
  4. COVID-19: Lasting Repercussions

The webinar discussion featured Bill Zawada of Laurel Hill, Valérie Douville of the TSX, and Sarah Gingrich and Neil Kravitz of Fasken and was moderated by Gordon Raman of Fasken.

  1. An Update from Proxy Advisory Firms

Gender diversity disclosure

Proxy advisory firms have updated their guidelines requiring greater disclosure related to gender diversity. Institutional Shareholder Services (“ISS”) ISS and Glass, Lewis & Co. (“Glass Lewis”) have outlined enhanced disclosure policies in line with the updates to the Canadian Business Corporations Act (“CBCA”) that came into effect in January 1, 2020 (the “CBCA 2020 Amendments”). As per the CBCA 2020 Amendments, CBCA reporting issuers are required to provide increased disclosure relating to gender diversity of directors and senior management. As of 2021, Glass Lewis began noting as a concern boards that consist of fewer than two female directors. The current requirement of at least one female board member to avoid a negative voting recommendation will remain the same for 2021. Additionally, as of January 1, 2022, Glass Lewis will generally recommend withholding votes for the nominating committee chair if a board has fewer than two female directors. In order to avoid a negative recommendation, companies with fewer than six directors must continue to have at least one female director. Boards will be able to avoid these negative recommendations from Glass Lewis in both 2021 and 2022 if they provide a suitable rationale or plan to address the lack of diversity on their board.

ISS will raise their existing gender diversity thresholds. As of  February 1, 2022, ISS will recommend withholding votes for the chairman of the nomination committee if fewer than 30% of directors are female, where the board hasn’t disclosed a formal gender diversity policy or where the board policy do not include a commitment to appoint females to at least 30% of the board within a reasonable time frame. ISS will continue to generally recommend withholding votes for the chair of a nominating committee where a company has no female directors and has not disclosed a formal written gender diversity policy for 2021.

Environmental, Social Risk Oversight

As of 2021, proxy advisory firms have now incorporated environmental and social risk disclosure into their policies. ISS has expanded their list of “governance failures” to include “failure to overlook environmental and social risks”. Glass Lewis will note as a concern TSX60 companies who do not provide appropriate disclosure of the board’s oversight of environmental and social risks. The implications are clear: If you have somehow tried avoid this issue, failure to address and manage these risks will now translate directly to voting considerations.

Exclusive Forum By-Laws

There has been a recent increase in issuers looking to impose exclusive forum amendments to their by-laws. Exclusive forum amendments restrict a shareholder’s ability to commence legal proceedings against an issuer to a very specific jurisdiction. Both ISS and Glass Lewis have noted that exclusive forum amendments, which they acknowledge may help reduce the cost of lawsuits to issuers, are generally not in the best interest of shareholders. Glass Lewis has therefore recommended shareholders vote against any exclusive forum amendments unless the issuer can explain why such a provision will directly benefit shareholders.

ISS has recommended voting on a case by case proposal basis relating to exclusive forum amendments to constating documents. An exclusive forum amendment is unlikely to garner a positive voting recommendation from ISS unless there is a compelling rationale for it. In making its recommendations in 2021, ISS will review the board’s rationale, legal actions that are subject to exclusive forum provisions, the issuer’s corporate governance provisions and the issuer’s shareholder rights in general.

Other Updates From Proxy Advisory Firms

Proxy advisory firms have announced a number of other updates effective in 2021, including relating to board tenure; financial expertise of board members; director attendance and committee meeting disclosure; continuance of jurisdictions of incorporation; and evergreen compensation plan.

For a more detailed discussion of the Glass Lewis and ISS updates for 2021, please see Glass Lewis and ISS Update Canadian Proxy Voting Guidelines for 2021 | Timely disclosure.

  1. An Update from the TSX


In response to COVID-19, the TSX put out a staff notice in March 2020 which provided certain relief for issuers including relief related to market impact disclosure and logistical issues in meeting technical requirements caused by COVID-19. Although the relief measures provided in 2020 have expired, the TSX plans to continue to closely monitor market conditions during the COVID-19 pandemic to determine its impact on listed issuers.

Corporate Governance

The TMX Group and the Institute of Corporate Directors are co-chairing the Committee on the Future of Corporate Governance in Canada (Committee). The mandate of this committee is to conduct a review on corporate governance practices in Canada with a focus on board of directors. The Committee aims to publish a report for comments on their findings in early 2021 with a final report in 2021. While TMX Group is co-chairing the committee, it is doing so as a corporate issuer with a strong position in Canada’s capital markets.

TSX’ role with regards to the Committee is to be advocating for its listed issuers. TSX is mindful of the myriad of challenges issuers of various sizes face in today’s corporate environment and wants to represent/defend the interests of its listed issuers. TSX wants to make sure the Committee addresses the need to reconcile the advancement of enhanced governance standards against the backdrop of various stakeholder efforts aimed at reducing regulatory burden for all public companies and proportionate expectations around enhanced governance standards for companies based on the size and maturity of issuers.

Capital Markets Modernization Taskforce

The Ontario Provincial Government’s Capital Markets Modernization Taskforce released its report in July 2020 with 47 key issues and proposals. The TSX is reviewing the report and the impact of the proposals on listed issuers.  In particular, the TSX has cautioned against singling out a listing on a specific exchange resulting in the application of certain proposals.  Instead, the TSX has recommended using a different set of criteria to identify larger issuers based on metrics such as enterprise value. In addition, the TSX has recommended a framework for guidance around board diversity and environmental and social disclosure rather than the Taskforce’s recommendation for board diversity quotas and mandating environmental and social disclosure.

  1. Diversity Disclosure

Canadian Regulatory Regime

The Canadian diversity regulatory regime is primarily a “comply or explain” regime which requires issuers to disclose in their annual shareholder meeting materials what their gender diversity policies are and what targets have been set, if any. The previously mentioned CBCA 2020 Amendments have extended the disclosure required under this framework, now mandating CBCA issuers to disclose to what extent they have diversity of certain designated groups, including women, visible minorities and disabled persons on their board and senior management. The CBCA 2020 Amendment also requires the disclosure of a company’s targets and policies related to diversity. The CBCA 2020 Amendment is one of the most advanced diversity disclosure frameworks in the world. While the framework is still based on a disclosure model which does not mandate diversity quotas on companies, the CBCA 2020 Amendment appears to be having some impact on increasing gender diversity on boards.

Canadian Extra-Regulatory Regime

As discussed earlier, proxy advisory firms have adopted a number of policies related to increasing the diversity of Canadian issuer’s boards and senior management. In the near term, it appears institutional shareholders will also continue to implement their own diversity requirements. Institutional shareholders’ own diversity targets, which have often gone beyond what has been set by ISS or Glass Lewis, have put pressure on a number of issuers to change their diversity practices. This trend of increased pressure from institutional shareholders for further diverse representation on senior management and boards looks to continue into 2021.

Voluntary Initiatives

A number of societal events and initiatives during 2020 have led to an increased pressure to achieve greater diversity on boards and senior management. The Black North Initiative is an organization advocating for enhanced representation for people of colour on boards and management. A number of large cap issuers, banks and law firms, including Fasken, have signed onto the Black North Initiative and other similar social and environmental initiatives. These initiatives will likely continue to grow in prevalence in 2021.

Public Opinion

Public demand for diversity has increased drastically over 2020. As a result of public pressure, companies have often adopted diversity policies that were not suitable for the company. There is no “one-size fits all” solution for issuers when it comes to diversity policies. During 2020, a number of companies who had adopted unsuitable diversity policies simply ended up not adhering to their new policies which has proved problematic. Before implementing a diversity policy, companies should evaluate how the policy will fit within the company’s existing corporate governance model, how the policy can be applied based on the size of the company, how the company reflects society in general and what the specific circumstances of the company are.

  1. COVID-19: Lasting Repercussions

Proxy and Continuous Disclosure

Disclosure of how an issuer may continue to affected by COVID-19 is one of the most tangible issues companies should be thinking about this proxy season. Companies need to not only consider disclosing how COVID-19 has affected their day-to-day operations, but also the effect COVID-19 has had on the demand for their products, their supply chains, the health of their employees and the company’s role in the community. Most critically, however, companies must consider how they can use their continuous disclosure materials to outline what the board’s role has been in overseeing the company’s response in managing the risks created by COVID-19.


Compensation disclosure will be a highly scrutinized area in 2021. Issuers in industries that have suffered due to the COVID-19 pandemic might have an inclination to “soften” performance metrics related to compensation. ISS and Glass Lewis have both specifically cautioned against the softening of performance metrics, noting that neither would look favourably upon boards who do so. The disclosure of an issuer’s rationale for softening performance metrics is therefore especially critical in 2021. Alternatively, issuers that have been highly successful during the pandemic should also be cautious regarding compensation. Issuers should consider if a company’s success has come at the expense of any of the firm’s stakeholders. If so, it is critical that the board provide adequate disclosure and rationale to support their position.

Financial Guidance and Commentary

During early 2020, many issuers struggled to provide financial guidance due to the unprecedented nature of the COVID-19 pandemic. As the COVID-19 pandemic has progressed, some companies have provided more transparent disclosure about the impact of the pandemic on their operations and earnings. The approach companies take with respect to financial guidance will likely continue to be dictated by the situation each company finds itself in and whether more frequent guidance is suitable.

Virtual Shareholder Meetings

COVID-19 demanded the adoption of virtual shareholder meetings. A company’s ability to host a virtual shareholder meeting is determined by the corporate law statute that governs it. The CBCA currently allows for virtual meetings where an issuer has explicitly contemplated virtual meetings in its by-laws, while the corporate statutes of Ontario and Alberta have allowed for virtual shareholder meetings generally unless the issuer’s by-laws state otherwise. These different jurisdictional approaches have ultimately led to a number of issuers amending their by-laws in 2020. During 2020, virtual shareholder meetings were either typically hosted on more advanced paid platforms or cheaper more problematic platforms. Initially, contested elections were incredibly difficult to host in virtual shareholder meetings but new innovations in paid platforms promise to increase the ease of hosting contested meetings in 2021.

So far in 2021, Glass Lewis has reverted to its pre-COVID-19 guidance, under which Glass Lewis will recommend withholding votes from governance committee members where companies seek to host virtual meetings, unless disclosure in the proxy circular assures shareholders that they will be afforded the same rights and opportunities to participate as they would at an in-person meeting. For its part, ISS has indicated that it will extend its 2020 pandemic guidance and will not oppose virtual meetings this season. Clearly, virtual shareholder meetings look to continue to be necessary in early 2021 as the COVID-19 pandemic continues. Canada’s banks and insurance companies have already received court approval to host their 2021 annual general meetings virtually and in October of 2020, the Ontario government extended the application of some, but not all, of the amendments related to virtual shareholder meetings.


The landscape of corporate governance has and continues to evolve in 2021. The COVID-19 pandemic, anticipated and actual amendments to corporate and securities laws, and updated guidance from proxy advisory firms has accelerated and fundamentally changed how companies must prepare for the upcoming 2021 proxy season.

For a further discussion of these items, as well as a discussion on material information versus material change disclosure standards, the likelihood of semi-annual versus quarterly reporting; shareholder engagement in the virtual world; and the adoption of notice-and-access by issuers, please see the Fasken Proxy Season Preview 2021 webinar.