The Toronto Stock Exchange (TSX) took two strides towards the implementation of mandatory majority voting for directors. Firstly, it announced its adoption of several amendments to the TSX Company Manual, effective December 31, 2012, aimed at improving corporate governance standards and disclosure including the implementation of a “comply or explain” majority voting requirement. Secondly, it requested comments on a proposal to make majority voting mandatory for the election of directors at uncontested meetings of TSX listed issuers. In contrast to plurality voting, where a director or slate is elected if at least one vote is cast “for” the director or the slate regardless of the number of “withhold” votes cast, majority voting calculates both the number of “for” and “withhold” votes cast for each individual board nominee. Often majority voting policies require those directors who receive a majority of “withhold” votes to tender their resignation, which will be effective immediately or if accepted by the Board in its discretion. The TSX contends that these changes will better align Canada with the corporate governance best practices of other major international jurisdictions, thus strengthening the integrity and reputation of the Canadian capital mark. Our M&A bulletin details this change in corporate governance.
