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Sasha Toten posts "You want to be listed on the TSX? Make sure your governance plans includes diversity" on Canada Cannabis Legal

Jun 22, 2017

Minden Gross LLP lawyer Sasha Toten posted her article about the importance of including diversity in governance plans.

You want to be listed on the TSX? Make sure your governance plans includes diversity

Originally published on Canada Cannabis Legal by Sasha Toten on June 22, 2017.

Since 2014, National Instrument 58-101 Disclosure of Corporate Governance Practices (“NI 58-101”) has required that non-venture issuers in Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Québec, Saskatchewan and Yukon disclose certain information regarding women on boards and in executive positions (the “WB/EP Rules”).

The Canadian Securities Administrators (“CSA”) have since conducted staff reviews of the WB/EP Rules to assess non-venture issuers’ compliance with the requirements. The CSA’s most recent report, dated September 28, 2016 (the “2016 CSA Report”), showed an overall increase in the number of women holding board seats from 11% to 12% from the first year of the amendments to NI 58-101 to the second year.

The nomination of women to the boards of cannabis companies is even less, however, with only 5% of the board seats at publicly traded marijuana issuers currently occupied by women, according to data provided by The Canadian Press.

Incorporating diversity among directors is important – a board of directors that has the skills and reflects the various needs of the market will be important for the ultimate success of issuers whether in the cannabis industry or not. Part of the issue could be that not all issuers are even complying with the new “comply or explain” regime.

Of the issuers in the sample surveyed for the 2016 CSA Report, 59% of issuers disclosed that they did not adopt a policy and 2% of issuers (or 13 issuers) provided no disclosure related to policy adoption.

While this is an improvement from the prior year, in which 65% of issuers disclosed that they did not adopt a policy and 8% of issuers (or 61 issuers) provided no disclosure related to policy adoption, there is tremendous room for improvement.

When issuers put their minds to the WB/EP Rules, progress has followed. The 2016 CSA Report found that the 141 issuers that had a policy had a higher percentage of women on their boards of directors (18%) than issuers without a policy (10%).

With a consumer audience with a wide variety of needs, cannabis issuers (and private companies) would benefit from directors and executives who reflect that diversity and needs.