TORONTO (miningweekly.com) – Recent requirements surrounding shareholder voting adopted by the TSX had been successfully rolled out and were being closely monitored, TSX director of compliance and disclosure Eleanor Fritz told an audience at a recent gathering of Women in Mining in Toronto.

One of the latest evolutions in shareholder voting rights was the reclassification of “withhold” votes as “no” votes for the election of directors to a TSX-listed issuer’s board. In the past, withhold votes were neither “for” nor “against”, which enabled directors who received a majority of withhold votes to be elected.

Today, receiving a majority of withhold votes required the affected director or directors to resign from the board.

Fritz noted that most issuers had accepted these resignations. However, companies could cite exceptional circumstances for rejecting a resignation. “And the board has the right to say no when it deems there’s an exceptional circumstance. Shareholders can then initiate a proxy fight if they want to pursue it,” she said.

“It has been the first year this requirement has been in place and we’ve already seen a few directors having to resign,” she added. “The issuer must publish a news release of the voting results and a further news release once the board has determined whether the resignation was accepted or not, and its reasons if it was not.”

The TSX’s compliance and disclosure department continued to examine the language of majority voting policies, ensuring these were updated and transparent. The TSX would also look at the terms and conditions of advance-notice policies adopted by issuers.

In the past, some shareholder meetings could involve sudden nominations from the floor, with directors elected if they gained enough votes. This placed proxy-voting shareholders at a disadvantage as they had no knowledge of, or opportunity to examine, all the proposed directors presented for election.

Advance-notice policies had, however, ensured that all shareholders had an opportunity to vote for the proposed directors, with all of the relevant information reviewed ahead of a shareholder meeting.

However, Fritz noted that overly complicated conditions had been embedded by a few companies in their advance-notice policies. This frustrated the ability of security holders to put forward a director candidate and could also have served to entrench the current board.

“For example, there could be a policy seeking the filing of a personal information form that’s not required by the company for its proposed directors,” Fritz said. “Or a form might have to be filed with a corporate secretary, whose details – as well as the form itself – are not listed on the website, which means you have to contact the issuer to retrieve this.”

Other examples included shareholders having to provide the dates when their shares were acquired. “So it becomes an exercise in threading a needle – it becomes unnecessarily difficult to comply with all of these requests,” she advised.

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Disclosure regarding female representation in the boardroom, adopted by certain members of the Canadian Securities Administrators (CSA), had also been introduced, helping to highlight and track an increase in the number of women at the boardroom level in mining companies.

Under the requirements adopted by certain CSA members, TSX-listed issuers now needed to disclose the level of female representation within their boardrooms. For mining companies this level had increased in recent years.

The TSX compliance and disclosure department studied around 200 circulars in 2013 and found that about 4% of mining issuers had women in the boardroom. At the annual conference of the Canadian Society of Corporate Secretaries, business law firm Osler, Hoskin & Harcourt noted that this figure in its study of circulars had increased to 7%.

On average, smaller TSX-listed issuers had fewer female directors, while larger issuers had higher levels. Fritz also pointed out that certain voluntary initiatives existed in Canada to support an increase in the number of women on boards. For example, a Canadian chapter of the 30% Club had been trying to get issuers committed to at least 30% female board representation by 2019.

The disclosure requirement also asked whether a company had a diversity policy in place and whether targets had been set in relation to female representation.

Fritz identified the importance of having women progress through companies at an even rate alongside male cadres. “Is the female–male ratio being flipped at the same percentage as you go up the corporate ladder, or are you getting a pyramid structure for women?” she asked. “From a diversity standpoint you need to move the same proportion of people up through an organisation.”

Scrutiny also continued in relation to issuers’ news releases, Fritz added, reminding the audience that the front-line administrator for this was the Investment Industry Regulatory Organisation of Canada (IIROC).

Part of IIROC’s duties was to strike down overly promotional language. This included phrases and words like world-class projects, world-class deposits, bonanza grades, abundant visible gold, or spectacular and extraordinary.

Efforts to bury bad news had been another issue and Fritz highlighted an example where a company announced that it was attending a trade show in the first paragraph of a news release and that an administrative assistant was leaving in the last paragraph.

“But the two middle paragraphs noted the CFO had resigned and that a director was gone. The psychology here appears to be that a rushed reader will only take note of the first and last paragraphs.”

Oversight also included the power to make listed companies reissue a release. For example, this could occur if bad news was announced late on a Friday just before a long weekend. Website disclosure and material used for company presentations were closely monitored as well.

Fritz underlined the debate surrounding the use of metal equivalents. For example, the CSA noted that metal equivalents could not be used if the metal was not the primary one contained on a company’s property.

Other issues had included the discussion of production potential without economic analysis; preliminary economic assessments, prefeasibility studies or feasibility studies being released without accompanying after-tax economic data, such as net present value; and the nondisclosure of quality control and quality assurance procedures.