OSC seeks input on disclosure rules regarding women execs

Should TSX-listed firms be required to disclose details on women serving on boards and in senior management roles? The OSC wants to hear your opinion.

The Ontario Securities Commission is seeking input on a whether it should require listed companies to disclose details on women serving on boards and in senior management roles, including disclosure on board composition, and is requesting input from investors, issuers, and advisors.

“In my view, diversity of opinion is invaluable to corporate decision making, and it is therefore necessary to encourage greater representation of women at senior levels' said Maureen Jensen,” OSC executive director and chief administrative officer. “This proposal will inform investors of the progress that Canadian companies are making in advancing the representation of women on their boards and in senior management.”

According to statistics, women continue to be underrepresented on boards and in positions of senior management in Canada, the OSC noted. As such, the regulator is considering possible amendments to its rules regarding the disclosure of corporate governance practices, which currently make no mention of gender in its requirements for disclosure on board composition. The new rules, if adopted, would not apply to venture issuers and investment funds.

While some may question whether gender equality is an issue that regulators should address, Laura McDonald, a co-founder of GoldenGirlFinance.com, said research backs up the value of having more women on boards in senior executive roles.

“According to research from Catalyst, on average, companies with the most women on their boards outperformed those with the least women by 53% in terms of return on equity,” McDonald told WP. “On average, companies with the most women on their boards outperformed those with the least women by 66% in terms of return on invested capital.”

“It seems the minimum threshold at which having more women present begins to pay off is the ‘magic number three,’ that is, having a minimum of three women serving on a board appears to lead to significant returns.”

Under the OSC’s proposal, TSX-listed companies and non-venture issuers would provide disclosure as part of their annual summary of corporate governance practices in areas such as: policies regarding female representation on boards and in senior management; consideration of the representation of women during director selection; and other quantitative information regarding the representation of women in the organization, on the board and in senior management.

The OCS said it is seeking feedback from investors, issuers, market participants and advisors to inform its recommendations to the Ontario government, which highlighted gender diversity as a priority in the 2013 Budget.

On June 14, Ontario Minister of Finance Charles Sousa and the then Minister Responsible for Women’s Issues, Laurel Broten, requested that the OSC undertake a public consultation process regarding disclosure requirements for gender diversity. Specifically, they requested the OSC undertake a public consultation process considering a “comply or explain” disclosure regime for TSX issuers relating to board and senior management gender diversity policies and practices.

The commission is to provide recommendations on specific disclosure requirements by fall.  The comment period will end on September 27, and the OSC will host a roundtable in the fall.