TD Bank Financial Group said Friday it is the first Canadian bank to introduce term limits for its directors.

Under the new guidelines, TD Bank directors may serve up to a maximum of 10 years, subject to solid annual performance and annual re-election by shareholders. The bank said the policy “represents a new approach to board renewal and supports [the bank’s] goal to bring fresh perspectives to the boardroom.”

Executive officers of the bank must resign as directors of the board on retirement, unless the board feels there is a specific need to retain the director’s expertise. The policy allows an executive officer to serve an additional six months to assist in an orderly transition for executive functions, or in exceptional circumstances, for up to two years.

The board may extend a director’s initial 10-year term by an additional five years, for a total maximum of 15 years, if the board’s corporate governance committee so recommends. In the event a director reaches the mandatory retirement age of 70 before reaching the end of a 10 year term, the Board has the discretion to make a decision to extend the director’s service until the earlier of the end of the term or age 75.

“We have listened to shareholders and other corporate governance leaders and believe term limits are needed because many directors are joining Boards at a younger age,” John Thompson, chairman of TD Bank Financial Group, said in a release. “Directors who join our Board in their 40s could conceivably serve for 30 years, so term limits help guarantee Board renewal and fresh perspectives.”

The board also announced it will recommend shareholders appoint a sole auditor for the 2006 fiscal year. The chairman, in conjunction with the audit committee, will review the bank’s two current external auditors in 2005 and make a recommendation to the board.

“A single auditor offers shareholders enhanced audit efficiencies while providing the bank’s management with greater flexibility in selecting consultants for non-audit related functions,” said Hugh Bolton, chairman of the audit committee.