Directors’ performance subject of TSE study

A draft report of The Toronto Stock Exchange’s Committee on Corporate Governance in Canada is aimed at improving the manner in which corporations are governed.

Where Were the Directors?, as the report is called, follows a year-long study. The title reflects investors’ concerns about the performance of boards of directors in light of a series of company failures in recent years. The recommendations include appointing a majority of directors unrelated to the company, establishing board committees to recruit new directors, and encouraging communication between the corporation and its shareholders. The report recommends that corporations disclose, on an annual basis in an information circular, whether they comply with the governance guidelines. If the company does not comply, an explanation would be required. Other recommendations include a review of legislation surrounding director liability by federal and provincial governments, and an examination of the issue of civil liability and continuous disclosure.

The committee plans to issue a final version in the fall, at which time the TSE will review the recommendations and consult its listed companies before sending any proposed actions to the TSE board of governors for approval. The committee is an independent entity composed of members of the business, investment, legal and academic communities. The chairman is Peter Dey, a former chairman of the Ontario Securities Commission and a senior partner of the Toronto law firm of Osler, Hoskin & Harcourt.