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Diversity Disclosure Reporting Explained for Canadian Issuers

The Canadian corporate governance landscape continues to evolve with diversity disclosures at the forefront of the discussion. This has largely been in response to scrutiny by regulators, shareholders and media. But there's also empirical evidence that diverse companies are 70% more likely to have entered into a new market than organizations that do not actively recruit and support talent from under-represented groups.

The first step in Canada's push for diversity transparency was the "Comply or Explain" rule in 2014, which mandated gender diversity disclosure at the board and executive officer levels for non-venture TSX issuers. The result was some progress in increasing women representation on boards as well as building a talent pipeline for executive positions.

The next phase is amendments to the Canada Business Corporations Act (CBCA) which came into effect on January 1, 2020 and covers gender and non-gender measures. All corporations governed by the CBCA with publicly traded securities, including venture issuers, now must disclose the number and percentage of women, aboriginal persons, members of visibility minorities and persons with disabilities on the board and within senior management.

One year later, Corporations Canada has advised of challenges when reviewing disclosure that was provided for 2020. They recently provided guidelines to assist issuers in preparing their disclosure information in a more clear and consistent manner.

Here is a summary of how Corporations Canada would like issuers to provide disclosure information:

  • Use a table format to present the information in a clear and consistent manner.
  • Identify the timeframe for disclosure to distinguish diversity information as of a certain date as opposed to a future or past state.
  • Present targets for representation on the board and among senior management separately, indicating timeframe for each target.
  • Provide an explanation if the issuer has not adopted a target for specific designated groups covered by the Act.
  • Disclose separately any optional information on diversity targets such as those for the total workforce or other groups that contribute to diversity.

Details of these guidelines with examples are available on the Corporations Canada website.

It is not enough to file disclosure information solely on SEDAR and it must be submitted directly to Corporations Canada. To reduce administrative burden, issuers have the option to include diversity disclosures in their proxy circular, which can be submitted to Corporations Canada through their online filing centre or by email.

According to Corporations Canada, consistency in how issuers disclose diversity information will lead to better shareholder-management dialogue about the benefits of diversity. It will also facilitate annual analysis of data submitted to potentially show steady progress toward more diversity in Canadian companies.

If you have questions about your specific requirements, please speak with your legal advisors. If TSX Trust can be of any assistance, please contact your Relationship Manager.

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