In an effort to beef up its governance, the Canadian Investment Regulatory Organization (CIRO) is proposing to expand the term limits that apply to its independent directors.
On Thursday, the industry self-regulatory organization (SRO) published a proposal to amend its bylaws to increase the maximum time that an independent director can serve on its board from eight to 10 years — raising the term limits from four to five consecutive two-year terms.
The proposal comes in the wake of a governance review by the SRO’s governance committee, which concluded that increasing the term limits “would better reflect contemporary governance standards and provide additional flexibility for board renewal and continuity.”
Expanding the maximum tenure of CIRO’s independent directors will ensure that those directors “have sufficient runway to steward complex, multi-year initiatives, mentor committee leadership, and embed lessons from oversight cycles,” it said.
Additionally, higher term limits will give independent directors more time to develop the expertise needed to effectively oversee the industry SRO, it said, which is not an issue with industry directors that come to the task with the requisite experience.
Alongside the proposed bylaw change, CIRO said its board intends to adopt a five-year term limit for the chair role — and, for an independent director that’s serving as chair, it’s seeking to extend the maximum term to 12 years.
“This approach is intended to balance the benefits of experienced board leadership with the need for regular renewal,” the SRO said in a notice detailing the proposed reform, adding that “it would allow the board to appoint a senior and experienced independent director as chair in their seventh year of service, enabling them to complete a full five-year term as chair.”
The deadline for submitting feedback on the proposed reforms is March 23.
The proposed amendments will have to be approved by the SRO’s members at its next annual general meeting in September. Assuming that’s achieved, it’s expected that the changes will be implemented in the fourth quarter, following regulatory approval.