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The new boardroom is seen inside the Museum of Nature in Ottawa.Pawel Dwulit/The Globe and Mail

Canada's Institute of Corporate Directors has thrown its backing behind a proposal by the Ontario Securities Commission to develop a new disclosure rule for companies to boost the number of women on boards of directors.

The ICD, a voluntary organization representing 7,600 Canadian board members, said it supports the thrust of the OSC's new "comply or explain" diversity proposal, and said it conducted a survey of its members who were largely supportive of the plan.

ICD chief executive officer Stan Magidson said his organization put out a paper in 2011 calling for Canadian companies to develop their own voluntary disclosure policies around board diversity, so the OSC proposal is a "natural extension" of its existing views.

"I think it's a good initiative that allows for flexibility in terms of how issuers will go about this, but it causes them to have to think about diversity and indicate to investors and the market their approach to it," Mr. Magidson said in an interview.

The OSC has asked for public comment on whether it should develop a new policy requiring companies to disclose the proportion of women they have on their boards and in senior management as well as outlining their policies and plans to improve their gender diversity. Under the OSC proposal, companies would also have the option of not complying with the rule and instead explaining why they have opted out of the disclosure, a system known as "comply or explain."

The comment period was originally set to close Sept. 27, but the OSC announced Monday it would be extended to Oct. 4.

The ICD's support gives the proposal a high-profile backer as the OSC waits to see how the corporate community will respond to new diversity guidelines. As of Monday afternoon, just 11 comment letters had been posted on the OSC's website, many of them from individuals raising concerns that the plan intrudes on the rights of companies to choose their directors, unfairly disadvantages men, or is insulting to women who do not need help getting board postings.

In its comment letter submitted Monday, the ICD said its members prefer the OSC's voluntary model to a mandated diversity policy or the creation of firm quotas, which it would not endorse. It also supports only having the policy apply to companies listed on the Toronto Stock Exchange, and not to smaller companies listed on the TSX Venture Exchange.

The ICD said its only significant issue with the proposal is that it focuses solely on gender diversity, and does not include other types of diversity, including "ethnicity, age, business experience, functional expertise, personal skills, stakeholder perspectives and geographic background."

"The ICD believes the proposal is meaningful and worthy of pursuit, though our preference would be that the OSC consider diversity disclosure more generally, as supported by our members," the letter said.

The ICD also urged the OSC to work with securities regulators in other provinces to try ensure "one disclosure regime will prevail across the country."

The institute recommended companies be able to set their own measurable goals for diversity based on the nature and structure of their organization, rather than being told specific things they must measure, such as diversity at each employee level or at each subsidiary.

Mr. Magidson said that after a period of time – perhaps three years – the OSC could review the issue to see if it needs to introduce firmer rules if no change has occurred in the interim.

"It would allow the director community and regulators to look at how things are progressing and whether it's adequate or if other things are necessary," he said. "I'm hopeful the market will respond."