CHAPTER 04 True Majority Voting for CBCA Public Companies: Is Your Board Ready?
board immediately after the meeting and which the board may accept at any time within the following 90 days. Also illustrative may be the established practice of directors undertaking to stock exchanges that they will resign on the happening of certain events (typically, failing to receive stock exchange clearance of a personal information form). Practices developed in other corporate jurisdictions with true majority voting, such as Delaware, may also be a useful reference point. These considerations remain to be digested and settled by market participants. Any amendments to bylaws will require shareholder approval, which may occasion proxy advisory firms such as Institutional Shareholder Services Inc. (ISS) and Glass Lewis & Co. to provide further guidance on their expectations regarding the way CBCA issuers may formalize holdover director continuance and resignation arrangements. Of course, any proposed changes to an issuer’s constating documents should be made with reference to the then-current guidelines of proxy advisory firms. With any luck, we will receive further guidance from proxy advisory firms in advance of the next proxy season. Does a TSX-Listed CBCA Public Company Need to Adopt (or Continue) a TSX Majority Voting Policy? Under the current TSX rules, all listed issuers other than majority-controlled corporations must comply with the TSX’s requirement that each director “must be elected by a majority (50% + 1 vote) of the votes cast” in a non-contested meeting (Majority Voting Requirement). Listed issuers must adopt a majority voting policy to implement the Majority Voting Requirement. The policy
must provide that a director who does not receive the required majority of votes must tender their resignation to the board, even where that director is legally elected to the board under the issuer’s corporate statute. The TSX rules go on to provide, however, that a listed issuer is exempt from the requirement to adopt a policy to implement the TSX’s Majority Voting Requirement if the issuer satisfies the requirement “in a manner acceptable to TSX, for example, by applicable statutes, articles, bylaws or similar instruments.” The TSX has stated that, once in effect, the majority voting rules of the CBCA “will likely satisfy” the TSX’s Majority Voting Requirement, and the TSX “will likely not require” issuers incorporated under the CBCA to have a majority voting policy in place. The CBCA majority voting regime and the requirements imposed by an issuer’s TSX majority voting policy may not easily operate side by side if the terms included in the policy conflict with the statutory regime (for example, some policies refer to “for” and “withhold” votes, but proxy cards in the new regime require that votes be “for” or “against”). There may be reason to continue or adopt certain features of the current era of TSX majority voting policies, like the requirement that, following a meeting, unelected incumbents must tender their resignation subject to acceptance of the board (discussed above). As the next proxy season approaches, and perhaps with further guidance from the TSX in hand, TSX- listed CBCA issuers may need to engage in a formal exercise of terminating or amending their TSX-based majority voting policies to conform to the new statutory regime (with accompanying disclosure made in their management information circulars).
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Davies | dwpv.com
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