º¬Ðß²Ýapp

Executive Summary

In 2025, Canada’s corporate governance landscape will be shaped by a combination of evolving disclosure frameworks, a tightening global regulatory environment, and the increasing influence of geopolitical and technological factors. Board diversity expectations, cyber risk oversight, and AI governance are rising as defining pillars of Canadian governance. While ISS and Glass Lewis only implemented slight policy revisions, investor scrutiny remains high across directorship standards, executive pay, and ESG oversight. Data from Diligent’s voting platform shows that remuneration proposals saw the widest variation in support, reflecting intensified investor focus on compensation governance. Meanwhile, the political divergence between the U.S. and Canada over DEI (Diversity, Equity, and Inclusion) policies has generated tension, especially for Canadian issuers with dual listings.

Further complexity has emerged from new SEC rules in the U.S., leading to more cautious engagement strategies by major investors. Meanwhile, Canada’s regulatory bodies, notably the OSC (Ontario Securities Commission) and CSA (Canadian Securities Administrators), are enhancing their commitment to transparency and board accountability, particularly on AI and sustainability matters. Notably, activism surged in Canada this year, with TD Bank’s AGM drawing national attention over governance failures linked to money laundering investigations. Overall, as 2025 unfolds, Canadian companies must balance a maturing principles-based governance regime with increasingly rule-driven global investor expectations.

AGM Voting Trends

Diligent’s aggregated voting data for 2025 paints a nuanced picture of investor sentiment across governance categories:

While director elections and committee-related proposals saw strong average support, low-end figures suggest isolated opposition to certain board members or audit practices. The remuneration category, however, displayed both the highest volatility and lowest minimum support, underlining investor concerns around pay-performance alignment and equity-based incentives.

Proxy Voting Guidance & AI Oversight

Glass Lewis and ISS released modest revisions to their 2025 Canadian proxy policies. Both emphasized the need for increased transparency in board oversight of emerging risks, particularly around AI and cyber governance. Glass Lewis introduced formal expectations for companies developing or using AI to disclose oversight structures, ethical frameworks, and board expertise in the area. It warned that directors could be held accountable where inadequate AI governance leads to shareholder harm.

ISS reaffirmed its stance on director independence, committee composition, and board refreshment, while flagging climate accountability and ESG-linked pay as growing areas of focus. While neither advisor introduced significant overhauls, the messaging was clear: scrutiny around board capabilities and ethical tech use is intensifying.

Political & Regulatory Context: DEI, Engagement & Diverging Jurisdictions

The U.S. political shift following President Trump’s return to office has cast a shadow on corporate governance norms in North America. His January 2025 executive order to dismantle DEI programs prompted ISS to suspend enforcement of board diversity guidelines for U.S. companies. Glass Lewis, conversely, upheld its DEI commitments. This divergence places Canadian companies with U.S. listings in a precarious position, as they face conflicting stewardship expectations.

Domestically, the CSA and OSC remain committed to progressive disclosure standards. Finalized diversity amendments are expected to mandate expanded reporting on board and executive composition, covering Indigenous peoples, racial minorities, and LGBTQ2SI+ groups. These reforms reflect a continuation of Canada’s principles-based, comply-or-explain approach.

New SEC rules enacted in February 2025 added further complexity. Under these changes, even passive investor communications may be construed as efforts to influence corporate control. This has led large institutional investors such as BlackRock and State Street to adopt a “listen-only” posture in engagements, effectively muting shareholder dialogue during the proxy season.

Shareholder Activism & Governance Flashpoints

Activist campaigns surged in Canada throughout 2025, with 49 tracked between January to mid-June 2025. The most high-profile case involved Toronto-Dominion Bank (TD). The bank’s AGM featured 11 shareholder proposals, many focusing on governance and oversight weaknesses stemming from ongoing anti-money laundering (AML) investigations. Investor concerns included board accountability, executive risk oversight, and transparency on regulatory compliance. The event has become a bellwether for broader governance expectations across the financial sector.

Elsewhere, the rise in activism reflects growing investor impatience with legacy board structures, insufficient ESG responsiveness, and inconsistent remuneration practices. Proxy advisors and institutional shareholders are placing greater emphasis on board effectiveness, risk oversight, and responsiveness to prior vote outcomes.

Conclusion

Canada enters the second half of 2025 with a strong, principles-based governance model, but one now navigating global crosswinds. Board diversity, ESG stewardship, cyber resilience, and AI governance have emerged as core focal points. While ISS and Glass Lewis continue to calibrate expectations, institutional investors are raising the bar. Companies must ensure they are not only compliant but genuinely responsive to shifting stakeholder concerns. Going into 2026, boards are encouraged to deepen expertise in ethical technology use, enhance disclosure practices, and align remuneration with both financial and non-financial metrics. In a world of regulatory fragmentation and rising activism, agility and transparency will define good governance.