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Global rules on foreign direct investment (FDI)
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
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Canada | Publication | November 19, 2021
Glass Lewis has published its Canadian proxy voting guidelines for 2022. The key changes for the upcoming shareholder meeting season relate to board gender diversity, board committee composition, environmental and social risk oversight and multi-class share structures.
Both Glass Lewis and Institutional Shareholder Services (ISS) announced amendments to their board gender diversity policies last year that will take effect in 2022. And both are going beyond those previously announced changes with additional requirements for next year.
As was previously announced, Glass Lewis will generally recommend voting against the chair of the nominating committee of TSX-listed companies if there are fewer than two women on the board, provided the board has seven or more total directors (with a minimum requirement of one woman for boards with fewer than seven directors). For companies listed on the TSXV, CSE or NEO exchanges, the requirement is for a minimum of one woman on the board. Another change for 2022, which was not previously announced, is that Glass Lewis may recommend voting against the entire nominating committee of TSX-listed companies if there are no women on the board.
We note that Glass Lewis has also expanded its concept of gender diversity on boards to include not only women, but also directors that identify with a gender other than male or female.
Looking ahead to 2023, Glass Lewis will require a minimum of 30% gender diversity on boards, rather than stating fixed numbers of directors. ISS is moving to a 30% minimum requirement in 2022, but only for S&P/TSX Composite issuers, provided that it will generally not recommend a negative vote if the company has a formal written gender diversity policy that includes a commitment to achieve at least 30% women on the board at or prior to the next AGM.
Glass Lewis will recommend a negative vote against the chairs of the board’s key committees if those committees have fewer than two members for the majority of the year. This policy will apply to the compensation, nominating and governance committees and will apply for all listed companies (not just those listed on the TSX).
This past year, Glass Lewis began noting its concerns where S&P/TSX 60 index companies did not provide adequate disclosure concerning director oversight of E&S issues. In 2022, these warnings will turn into a recommendation to vote against the governance committee chair. Glass Lewis is also expanding these guidelines to apply to all companies in the S&P/TSX Composite index. For those outside the S&P/TSX 60, concerns will be noted in 2022 (with the negative voting recommendations being applied in 2023).
In the wake of the Rogers litigation, Glass Lewis has updated its guidelines for companies that have a multi-class share structure with unequal voting rights. Beginning in 2022, it will recommend voting against the chair of the governance committee of such companies if they do not provide for a “reasonable” sunset of the structure, which Glass Lewis clarifies generally means seven years or less.
Interestingly, ISS has proposed to update its voting guidelines in the US (not Canada) to begin to make similar negative vote recommendations starting in 2023 (therefore providing affected companies with a one-year grace period).
Glass Lewis has made clarifying amendments by formalizing certain existing policies and expanding its discussion on others. These include the following:
We anticipate that ISS will publish its 2022 proxy voting guidelines by the end of the month. The Glass Lewis guidelines are available here.
Publication
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
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