Views on improving the integrity of global capital markets
02 November 2012

Corporate Governance Roundup: New Rules in Canada, Switzerland, U.K., and U.S.; Proxy Voting Innovation in Turkey

Updating Canada’s rules for director elections, Indonesia’s Bumi drama, Turkey’s electronic proxy voting system, and ISS’ proposed policy changes.


In October, the Toronto Stock Exchange (TSX) strengthened corporate governance rules for listed companies, including updated rules for director elections after consultation with the Ontario Securities Commission (OSC). The changes will end the use of slate elections and require directors to be elected both individually and on an annual basis. The changes also require companies to publically disclose the vote results of board elections. In a slate election, shareholders can only vote on the board as a whole, which can get in the way of board accountability.

TSX has also adopted a “comply-or-explain” approach that will require companies to disclose whether they have adopted a majority voting policy for uncontested director elections, and to disclose whether a director received a majority of “withhold” votes in cases where majority voting has not been adopted.


As you may have already read in the excellent summary of the corporate governance drama at Bumi PLC, corporate governance standards in the Asian archipelago took a hit in October. Nathanial Rothschild resigned from the company’s board after he helped launch an investigation into alleged irregularities at the company’s Indonesian operations.

The catalyst for the troubles is one we have seen before — a margin call of company shares owned by a large company owner that were pledged as collateral for loans. Rothschild and many investors are now gone, but an investigation into the company is ongoing.

Latin America

The Latin American Companies Circle, sponsored by the International Finance Corporation (IFC) and Global Corporate Governance Forum (GCGF), issued a report in October stating that boards should undertake regular independent evaluations and share information on board elections and management pay. The report recommendations follow on a 2010 report of corporate governance in Latin America that found such evaluations and pay transparency rare. Let’s hope the 2014 update includes increased disclosure.


Look to Turkey for corporate governance innovation. In October, Turkey became the first country to require issuers to offer electronic proxy voting with the 1 October inauguration of a voting platform called e-GEM. The system will stream annual general meetings (AGMs) real time and let shareowners communicate with each other, vote before the meeting, and even change their vote as an annual meeting occurs. Other markets have e-voting but do not require it of all listed companies. Expect other markets to keep an eye on this development, especially if investors like it.


Say-on-pay votes are here to stay. Most recently the Swiss fund adviser Ethos voiced support (report in French) of a government proposal concerning a nationwide Swiss referendum calling for binding shareowner votes on executive remuneration. The government proposal calls for advisory shareowner votes that can be made binding if a separate shareholder ballot to change the firm’s articles of association passes. The proposal would also allow advisory votes on severance payment bans, annual director elections, and election of the board chair at the AGM. In a competing plan, such votes would all be mandatory. The government proposal will automatically take effect if the referendum fails in the 3 March 2013 ballot.


Draft regulation in the U.K. proposes that issuers publish a stand-alone report on business strategy, executive pay, and ESG issues simplifying the annual report burden and making pertinent information more accessible to investors. The draft rules result from proposals first made last year by British Business Secretary Vince Cable. Not coincidently, a new paper by the Financial Reporting Council (FRC) recommends that the International Accounting Standards Board (IASB) develop guidance on materiality in order to engender more comprehensive disclosure.


Besides Halloween and freak storms in the Northeast, October brings the Institutional Shareowner Service (ISS) draft policy changes. The updated policy changes cover:

  • Board response to majority-supported shareholder proposals (U.S.)
  • Director over-boarding (Hong Kong and Singapore)
  • Board tenure exceeding nine years (Hong Kong and Singapore)
  • Board nominee disclosure (global)
  • Management “say-on-pay” proposals (U.S.)
  • Say on golden parachute proposals (U.S.)
  • Pay for performance (Canada)
  • Environmental and social non-financial performance compensation-related proposals (U.S.)

Among other things, the revised policies call for recommendations of “no” or withholding votes against entire boards if a resolution gains a majority of votes cast versus a majority of votes outstanding under current ISS policy. The changes also include calls for a case-by-case approach to proposals linking executive pay to environmental and social metrics. Deadline for comment is 9 November.

Photo credit: ©

About the Author(s)
Matt Orsagh, CFA, CIPM

Matt Orsagh, CFA, CIPM, is a senior director of capital markets policy at CFA Institute, where he focuses on corporate governance, ESG, and climate change analysis. He writes and speaks frequently on these topics on behalf of CFA Institute. His paper, Climate Change Analysis in the Investment Process was named “Best ESG Paper” by Savvy Investor in 2021.

1 thought on “Corporate Governance Roundup: New Rules in Canada, Switzerland, U.K., and U.S.; Proxy Voting Innovation in Turkey”

  1. Matt: Very interesting post on e-GEM platform in Turkey. I hope you will follow-up and keep us posted on how it changes corporate governance and shareowner involvement. Thanks. – Jim

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