In 2012 the Toronto Stock Exchange adopted rules which required listed issuers to disclose annually whether they had adopted a majority voting policy for the election of directors. At the time, the TSX had published for comment proposed rules which would mandate the adoption of a majority voting policy by each TSX listed issuer. The TSX has now approved final rules which make majority voting mandatory. These rules will come into effect for fiscal years ending on or after June 30, 2014.

In its notice, the TSX commented that it “proposed the Amendments to improve corporate governance standards in Canada by providing a meaningful way for security holders to hold individual directors accountable. TSX believes these Amendments enhance transparency and improve the governance dialogue between issuers, security holders and other stakeholders”.

The new rules are in the form of amendments to Sections 461.3 and 461.4 of the TSX Company Manual.

Summary of the New Rules

The new rules applicable to issuers provide as follows:

  • Each director of a listed issuer must be elected by a majority (50% plus one vote) of the votes cast with respect to his or her election other than at a contested meeting.
  • A listed issuer must adopt a majority voting policy which provides for the following:
    • Any director must immediately tender his or her resignation to the board of directors if he or she is not elected by at least a majority of the votes cast with respect to his or her election.
    • The board shall determine whether or not to accept the resignation within 90 days after the relevant security holders meeting. The board shall accept the resignation absent exceptional  circumstances.
    • The listed issuer must promptly issue a news release with the board’s decision, a copy of which must be provided to the TSX. If the board determines not to accept the resignation, the news release must fully state the reasons for that decision.
  • An issuer must fully describe its majority voting policy on an annual basis in its materials sent to security holders in connection with a meeting in which directors are being elected.
  • A listed issuer may, in lieu of adopting a majority voting policy, satisfy the requirements of the new rule by providing in its articles or by-laws (or being subject to an equivalent statutory requirement) a majority voting requirement (in a manner acceptable to the TSX) which would provide that directors must be elected by a majority of the votes cast at a meeting.

Listed issuers that are majority controlled are exempt from the majority voting requirement of the new rules. However, such issuers are required to disclose annually their reliance on the exemption and reasons for not adopting a majority voting policy. Moreover, the majority voting requirements do not apply to contested meetings where the number of directors nominated for election is greater than the number of seats available on the board.

The new rules clarify that the news release required to be issued following the election of directors applies to uncontested meetings and clarifies the nature of the information required in such release as well as the type of disclosure expected where the vote is conducted by a show of hands.


In light of the new rules, all TSX listed issuers that have not previously adopted  a majority voting policy will now be required to do so prior to their next year-end following June 30, 2014. Issuers that have already adopted a majority voting policy should review the terms thereof to ensure compliance with the requirements of the new rules.


Philippe Tardif


Securities, Capital Markets and Public Companies