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Proposed amendments to the Toronto Stock Exchange (TSX) corporate governance guidelines were recently published in response to the Saucier Report on corporate governance in Canada. Unlike the New York Stock Exchange (NYSE), the TSX does not have corporate governance listing standards. Instead, TSX companies are required to disclose their corporate governance system on an annual basis and, where the system differs from the TSX guidelines, to disclose the reasons for the difference.

In response to the Saucier Report's recommendations, the TSX has proposed substantive amendments to its guidelines and extension to all listed issuers (not just listed companies). However, the TSX's position continues to be that each issuer should have the flexibility to develop its own approach to corporate governance and that the role of the TSX is to provide a framework for issuers to provide meaningful disclosure of their corporate governance practices in order for the market to assess them. Consequently, the TSX has not adopted the Saucier Report's recommendation that, as a listing requirement, issuers be required to have an "independent board leader". Instead, the TSX has proposed an amendment to its existing guideline which already provides for appointing a non-management chair of the board. The proposed amendments would further provide that every board of directors should implement structures and procedures to ensure board independence from management and that an outside director, who is either the chair or a lead director, should ensure that the board carries out its responsibilities effectively. Looking forward, the TSX plans to conduct an annual review of corporate governance disclosure practices of listed issuers. Disclosure in respect of the amended TSX guidelines is expected to be mandatory for TSX issuers with a year-end on or after December 31 2002.

Kathleen M Ritchie

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