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OSC executive director Maureen Jensen says Canadian society is ready to accept regulation around gender diversity.

Gloria Nieto/The Globe and Mail

Canadian companies will be asked to disclose the proportion of women they have on their boards and in senior management as part of a new policy being proposed by Canada's largest securities market regulator.

The Ontario Securities Commission will unveil a consultation paper Tuesday suggesting that companies be required to develop and disclose policies to improve their boardroom gender diversity, or else explain why they have opted not to have a policy.

The proposal, which will be open for public comment until Sept. 27, would apply to large, publicly traded companies listed on the Toronto Stock Exchange, which is based in Ontario. It would not cover investment funds or smaller companies listed on the TSX Venture Exchange.

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The consultation paper is the OSC's response to a request this spring from the Ontario government asking the regulator to develop new guidelines to improve the proportion of women on corporate boards. Women fill about 10 per cent of seats on boards of publicly traded companies in Canada, a number that has barely shifted in recent years.

Many other countries have developed either mandatory or voluntary policies calling on companies to improve their gender diversity or their disclosure of diversity policies, while Canada has no similar requirements in place for public companies. Australia, for example, has implemented so-called "comply or explain" rules requiring companies to develop policies to improve their gender diversity, or explain why they have chosen to have no policy.

OSC executive director Maureen Jensen said she believes Canadian society is ready to accept regulation around gender diversity.

"I think it is the right time. Canada is lagging behind, and government is interested in this – multiple levels of government are interested in this," she said in an interview.

"And what we are proposing is modest. So it dovetails well with a lot of the basic principles of securities law, which is transparency. You shine a light on things and you encourage a dialogue between the board and investors."

Ms. Jensen said 43 per cent of Canada's corporate boards still have no female directors, "so I think you have to ask yourself how you get that diverse view" on boards.

The OSC's proposal does not call for quotas, instead favouring recommendations that would allow companies to voluntarily comply or opt out, similar to the Australian model. While Britain has issued guidelines urging large companies to aim for 25 per cent women on their boards, the OSC proposal offers no specific target.

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Instead, companies would be asked to report on the proportion of women filling executive officer and board director roles, and report on whether they have policies in place to improve diversity in those top jobs.

The disclosure requirement would summarize any objectives that had been developed to improve diversity, as well as "annual and cumulative progress" toward the goals.

The OSC's consultation paper is only a first step toward drafting new standards. The next stage, expected this fall, will be a detailed rule, which will be issued for public comment before a final rule is adopted.

Canada has previously developed "comply or explain" rules in other areas – including one suggesting the majority of directors on a company's board be independent and not part of management – and a vast majority of companies have ended up complying.

Ms. Jensen said that success makes her confident the approach will work with diversity.

"Our experience with other comply and explain regimes is that this will work to generate the discussion and move this issue forward. I think the other methods could be used if we don't get any traction. But we think at this point this is the right choice."

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The OSC itself has six female directors on its 16-member board, Ms. Jensen said, and women comprise 11 of 18 members of its executive management team.

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