Currently, director elections under the Canadian legal regime is based on a "plurality system" where shareholders vote either "for" a director or "withhold" their vote (i.e. do not vote). In a plurality system, withhold votes do not count and technically a director needs only one "for" vote to be elected to the board.
CCGG recommends that the boards of all Canadian issuers adopt a majority voting policy.
The adoption of majority voting is a three-step process:
- List individual directors on the Registered Form of Proxy or the Voting Instruction form.
- The Board adopts an internal policy which states that for any director receiving 50% + 1 withheld votes, those votes would be considered votes "against" the director. We have collected some samples of how companies have communicated a majority voting policy to its shareholders.
- Once a resignation is submitted, the Corporate Governance Committee (or equivalent) reviews any extra circumstances surrounding the voting results and makes a decision whether or not to accept the resignation. The Committee's decision is made public.