item 10 amended subsidiary and joint venture governance

Amended Version- January 28, 2016

Item 10 – Amended Subsidiary and Joint Venture Governance Framework

TCHC February 22, 2016 Meeting

Report: TCHC:2016-06 Attachment 1

AMENDED SUBSIDIARY AND JOINT VENTURE GOVERNANCE FRAMEWORK

TABLE OF CONTENTS

I. OVERVIEW OF RELATIONSHIP BETWEEN PARENT AND SUBSIDIARY ........... 1

II. SUBSIDIARY AND JOINT VENTURE FORMATION ................................................... 3

A. Authority to Form a Subsidiary ................................................................................... 3

B. Authority to Participate in a Joint Venture .................................................................. 3

C. Rationale for Establishing a Subsidiary or Participating in a Joint Venture................ 3

D. Process for Establishing a Subsidiary or Joint Venture ............................................... 4

III. TCHC OVERSIGHT OF THE SUBSIDIARIES AND JOINT VENTURES .................. 5

A. Principles of the Governance Structure of Subsidiaries and Joint Ventures ............... 5

B. Governance Structure................................................................................................... 6

1. Composition of a Subsidiary Board ................................................................. 6

2. Composition of a Joint Venture Board: ........................................................... 7

3. Composition of Officers: ................................................................................. 7

4. Process for the Nomination and Appointment of Outside/Independent

Directors ........................................................................................................... 7

5. Remuneration of Directors and Officers .......................................................... 8

6. Term of Office of Directors ............................................................................. 8

7. Removal of Directors ....................................................................................... 8

8. Director Roles and Responsibilities ................................................................. 8

9. Board procedures ............................................................................................. 8

10. Corporate Policies .......................................................................................... 10

11. Director Indemnification & Insurance ........................................................... 11

C. Matters Requiring TCHC Approval........................................................................... 11

D. Delegation by the Subsidiary Board .......................................................................... 11

E. Financial and Other Reporting Requirements ............................................................ 11

IV. REVIEW CYCLE ................................................................................................................ 12

APPENDIX “A” – GLOSSARY……………………………………………………………12

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APPENDIX “B” – Process for the Nomination and Appointment of Outside/Independent

Directors……………………………………………………………………………………………14



TCHC February 22, 2016 Meeting

Report: TCHC:2016-06 Attachment 1

AMENDED SUBSIDIARY AND JOINT VENTURE GOVERNANCE FRAMEWORK

(revised and updated as of February [●], 2016)

Purpose: This Amended Subsidiary and Joint Venture Governance Framework (“Framework”)

provides guidelines for TCHC’s oversight of its Subsidiaries and Joint Ventures.

The objectives of the Framework are to:

(i) ensure that there is an appropriate governance structure for the creation and oversight

of TCHC’s Subsidiaries and Joint Ventures;

(ii) identify the reporting and other requirements that Subsidiaries and Joint Ventures must

follow so that TCHC has an appropriate level of oversight with respect to the activities

and financial state of its Subsidiaries and Joint Ventures; and

(iii) provide for public reporting of the activities and purposes of TCHC’s Subsidiaries and

Joint Ventures, consistent with TCHC’s reporting obligations under the Shareholder

Direction and at law.

I. OVERVIEW OF RELATIONSHIP BETWEEN PARENT AND SUBSIDIARY

Maintaining Separate Corporate Identities: Generally, subsidiary corporations are created to allow

a Parent company to pursue other business opportunities without putting its own assets at risk. Since

a subsidiary has its own legal existence, a Parent company is generally not liable for the subsidiary’s

debts and obligations. However, in certain circumstances, the courts will disregard the separate

corporate entity by “piercing the corporate veil” of the subsidiary corporation and find the Parent

company liable for the acts of its subsidiary corporation and expose the assets of the Parent. The

Parent and the subsidiary should therefore establish proper corporate “separateness,” and ensure that

a subsidiary is not solely acting as an agent to carry out the acts and operations of the Parent.

As a basic principle, TCHC should not be involved in the day-to-day management of a Subsidiary.

Rather, the TCHC Board should establish long range goals, plans and policies of the Subsidiary, and

receive regular financial and operational reporting on the extent to which these goals are being

achieved.

In addition, the distinction between the assets and liabilities of TCHC and those of its Subsidiary must

be clearly marked, observed and maintained. In that regard, TCHC and the Subsidiary should

maintain separate bank accounts and accounting records, and file separate tax returns. The distinct

separate corporate identity of the Subsidiary from TCHC should also be made clear to third parties

through, for example, use of separate business stationery and by the Subsidiary entering into contracts

in its own name and signed by one of its own Officers, as an Officer of the Subsidiary.

TCHC may provide support to the Subsidiary, for example, through the sharing of services, such as

information technology, accounting services, human resources, strategic communications and

facilities. These arrangements should be documented in writing, through a Service Level Agreement

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where applicable, and any transactions between TCHC and the Subsidiary should be conducted on an

arm’s length basis.

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II. SUBSIDIARY AND JOINT VENTURE FORMATION

A. Authority to Form a Subsidiary

TCHC has full legal authority under the OBCA to incorporate a Subsidiary.

Section 4.2 of the Shareholder Direction provides that TCHC may, from time to time, create one or

more Subsidiaries to meet TCHC’s mandate. The creation and ongoing governance and activities of

TCHC Subsidiaries must comply with the Shareholder Direction, as applicable.

B. Authority to Participate in a Joint Venture

TCHC has full authority under the OBCA to participate in a Joint Venture.

Section 4.3 of the Shareholder Direction provides that TCHC may, from time to time, invest in one

or more Joint Ventures to meet TCHC’s goals. The initial and ongoing participation and investment

in Joint Ventures, and reporting and other requirements relating to a Joint Venture must comply with

the Shareholder Direction, as applicable.

C. Rationale for Establishing a Subsidiary or Participating in a Joint Venture

Sections 4.2 and 4.3 of the Shareholder Direction provide that the creation of a Subsidiary or

participation in a Joint Venture must meet TCHC’s mandate.

The decision to establish a Subsidiary or participate in a Joint Venture with an appropriately restricted

mandate can be based on one or more of the following criteria:

(i) Mitigates risk and/or liability: Where a Subsidiary is proposed to be formed for liability

protection, the insurable and uninsurable risks, and an estimated scope of the magnitude of

such risks are to be identified.

(ii) Enables activities to be undertaken which would be difficult or impossible for TCHC to do

itself due to the regulatory/legal environment governing the business activities.

(iii)Attracts funding (through receipt of tax-deductible contributions, private foundation and

government grants, or debt and equity financing) that would otherwise be unavailable to

TCHC or difficult to obtain by TCHC.

(iv) Provides a tax advantage / allows for revenue generation to preserve tax exemption of

TCHC.

(v) Allows for particular communities and stakeholder interests to be represented.

(vi) Sponsors activity that requires a degree of independence from TCHC.

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(vii) Provides a focused governance of a particular function or specialized activity,

thereby:

o Fostering greater entrepreneurship and nimbleness to take advantage of business

opportunities; or

o Having a board with particular skills and knowledge specific to the business; or

o Having a distinct business sub-set or function for which there is a benefit to greater

autonomy of operations.

D. Process for Establishing a Subsidiary or Joint Venture

Per Sections 4.2 and 4.3 of the Shareholder Direction, TCHC will consult with the City Manager

regarding the business purpose, financing, governance structure and reporting requirements of any

Subsidiary or Joint Venture prior to its creation. A business case shall be submitted in support of

such consultation process which should consider the following factors, as applicable:

(i) Description of the proposed Subsidiary or Joint Venture, business scope, strategic direction,

and performance objectives of the entity.

(ii) Rationale for the separate corporate existence (including preventing risk transfer and conflict

of interest between TCHC and the Subsidiary).

(iii)Risk Analysis and Risk Management System (including internal control systems and

compliance management system).

(iv) Financial Analysis, including:

o Financing or potential financing scenarios and financial cost benefit analysis of

separate corporate existence;

o Asset and liability transfer/acquisition, if applicable;

o Financial analysis appropriate to the nature of the Subsidiary or Joint Venture and

anticipated business arrangements;

o How value will be returned to TCHC;

o Tax Impact Analysis, if applicable;

(v) Regulatory environment;

(vi) Corporate governance structure;

(vii) Description of the management and staffing structure;

(viii) Board remuneration, if applicable.

The business rationale should be weighed against the costs of maintaining a Subsidiary or Joint

Venture, including the following: finance & accounting (GL, financial reports); legal (filings/returns,

legal support); records and administration (articles, resolutions, minute book); governance (board

meetings, material costs, corporate secretarial and legal support, staff time, board compensation);

audit (internal and external); and risks.

A business case that evaluates the financial suitability and sustainability of the proposed Subsidiary

or Joint Venture must be provided to GCHRCC, as well as the proposed governance structure, for

review and comment. As appropriate, the GCHRCC will then present the business case and

governance structure for approval to the TCHC Board.

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III. TCHC OVERSIGHT OF THE SUBSIDIARIES AND JOINT VENTURES

A. Principles of the Governance Structure of Subsidiaries and Joint Ventures

Sections 4.2 and 4.3 of the Shareholder Direction set out general requirements with respect to

Subsidiaries and Joint Ventures. The decision to create a Subsidiary or participate in a Joint Venture

will be made based on a specific need. As such, each Subsidiary or Joint Venture will have a different

mandate and a different set of objectives. The risks identified in the business case presented by TCHC

to its Shareholder will inform the governance and decision making structure for the Subsidiary or

Joint Venture.

While the governance structure, reporting requirements and composition of the Subsidiary Board or

Management Committee of a Joint Venture, respectively, will vary, in addition to principles included

in the Shareholder Direction, this Framework establishes the required governance structure,

Subsidiary Board/Management Committee and other management responsibilities and procedures,

and related matters, that allow reporting and accountability of the Subsidiary or Joint Venture to the

TCHC Board. The following sets out certain requirements that supplement the requirements of the

Shareholder Direction to achieve accountability.

Subsidiaries:

TCHC will appoint the Directors of the Subsidiaries from among the directors and officers of

TCHC or establish and a follow a process for the nomination and appointment of the Directors

that is approved by TCHC’s Shareholder.

Representation from TCHC officers and, in some cases, members of the TCHC Board shall

comprise a majority on the Subsidiary Board. The Chief Executive Officer (or delegated

Officer) and the Chief Financial Officer of TCHC shall automatically be directors of the

Subsidiary Board while they hold such positions with TCHC. The Chair and Vice Chair of

the Subsidiary Board shall be a member of TCHC Board.

Where appropriate, the Articles of Incorporation of the Subsidiary will set out any restrictions

on the business that the Subsidiary may carry on or the powers it may exercise.

In addition to meeting the legal requirements of the OBCA relating generally to the conduct

of the business and affairs of the Subsidiary, where appropriate, the By-laws of the Subsidiary

may contain special provisions that are required for the particular Subsidiary and/or its project

or activities.

TCHC must have more than 50% interest in the Subsidiary.

Applicable legislation that guides the operations of the Subsidiary including, without

limitation, the OBCA and the HSA, shall be considered and complied with.

A Shareholder Direction shall be established between TCHC and its Subsidiary (the

“Subsidiary Shareholder Direction”) consistent with the Shareholder Direction between

TCHC and its Shareholder with respect to business principles and standards of accountability

and reporting, with appropriate modification as determined by TCHC. Among other things,

the Subsidiary Shareholder Direction will outline:

o operating principles and objectives to be met by the Subsidiary in the form of a

business plan; and

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o the reporting requirements for financial and performance plans and results that the

Subsidiary must adhere to and submit to TCHC.

Joint Ventures:

Representation from TCHC Officers on the Management Committee of the Joint Venture.

Where appropriate, the Articles of Incorporation for the Joint Venture will set out any

restrictions on the business that the Joint Venture may carry on or the powers it may exercise.

In addition to meeting the legal requirements of the OBCA relating generally to the conduct

of the business and affairs of the Joint Venture, where appropriate, the By-laws may contain

special provisions that are required for the particular Joint Venture and/or its project or

activities.

Compliance with the applicable Joint Venture agreements (e.g. project agreement, partnership

agreement, or operating agreement).

Requirement for documents to be signed by one Management Committee representative of

each of the partners, and bank account transactions to be signed and approved by a

Management Committee representative of each partner, in accordance with the applicable

Joint Venture agreement.

Applicable legislation that guides the operations of the Joint Venture, including without

limitation, as applicable, the OBCA, the Ontario Partnerships Act, and the HSA to be

considered and complied with.

Each Joint Venture will provide TCHC with such reporting as TCHC considers appropriate,

but at a minimum include the Joint Venture’s annual financial statements, the achievement of

financial and service targets or other performance indicators, and such explanations, notes and

information as is required to explain and account for any variances between actual results

from operations and the targets set out in its annual business plan or budget.

B. Governance Structure

The governance structure of the Subsidiary or Joint Venture will meet the requirements, as applicable,

set out in the OBCA, its Articles of Incorporation, By-laws, any applicable legislation, the Shareholder

Direction, the relevant Subsidiary Shareholder Direction, and will reflect the principles set out in this

Framework.

TCHC has established the GCHRCC to assist the TCHC Board to implement appropriate standards

of Subsidiary and Joint Venture governance, investment requirements, financial reporting and other

matters as set out in the GCHRCC Charter.

1. Composition of a Subsidiary Board

In order to achieve the Subsidiary’s goals and benefits, TCHC must respect the separate corporate

existence of its Subsidiaries, and allow Subsidiaries the latitude they need to manage their business

and fulfill their corporate goals. It is appropriate for a Parent company to require and exert “high

level” subsidiary oversight, but a Parent company that holds substantial veto rights or control over

the subsidiary business could be viewed as the “alter ego” of the subsidiary and, as a result, be liable

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for the subsidiary’s liabilities. It is therefore important to strike the correct balance between parental

oversight and subsidiary independence.

Dependent on the mandate of the Subsidiary, the composition of the Subsidiary Board will range from

that of a small internal board (usually 2 Officers of TCHC and one or more TCHC Board member(s)),

to a board that includes outside directors with specialized expertise. While decisions on the

composition should be made on a case by case basis, this Framework sets out a uniform guideline for

board composition of Subsidiaries. The number and qualifications of directors will be consistent with

the OBCA and, as applicable, the Articles of the Subsidiary or Joint Venture and/or the governing

Joint Venture agreement.

In compliance with the Shareholder Direction, TCHC will appoint the directors of the Subsidiaries

from among the directors and officers of TCHC (or establish a process for the nomination and

appointment of directors that is approved by the City of Toronto). The Chair and Vice Chair of any

Subsidiary Board shall be a member of the TCHC Board and the selection of the Chair and Vice Chair

of the Subsidiary Board be shall be approved by the TCHC Board.

2. Composition of a Joint Venture Board:

The Joint Venture agreements generally provide for the formation of a Management Committee

comprised of 4 individuals, 2 from TCHC and 2 from the Joint Venture partner. For Joint Ventures

that operate through a corporation, 2 out of the 4 Board nominees should be TCHC representatives

from the senior executive team, usually the Chief Executive Officer (or delegated Officer) and the

Chief Financial Officer, and the other 2 representatives should be from the Joint Venture partner.

Joint Ventures that operate through a partnership should set out the governance structure in the

partnership agreement that follows the same principles as for a Management Committee.

3. Composition of Officers:

Where applicable, the officer structure of Subsidiaries and Joint Ventures should include senior

finance staff and a senior development manager from TCHC.

4. Process for the Nomination and Appointment of Outside/Independent Directors

The decision about including outside directors on the Subsidiary or Joint Venture Board will be made

by the GCHRCC which will establish a process to recruit nominees. The GCHRCC’s decision will

be based on the business, legal, regulatory, or capacity rationale, in light of:

the needs of the specific Subsidiary Board;

the interests of TCHC;

the type and impact of decisions made by the Subsidiary Board;

the financial risk factor; and

the perspectives, influences and expertise needed to deliver the mandate of the Subsidiary

Board.

The TCHC Board will have final approval of all nominations.

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Appendix B provides a guideline to address the nomination and appointment of outside/independent

directors to Subsidiaries and Joint Ventures.

5. Remuneration of Directors and Officers

Directors or Officers for Subsidiaries or Joint Ventures will not receive compensation.

6. Term of Office of Directors

Directors of Subsidiaries and corporate Joint Ventures who are not Officers of TCHC will usually be

expected to be a director for an initial 2 year period, which can be renewed once. The director will

be formally elected annually but, as shareholder, TCHC, unless circumstances dictate otherwise, will

adhere to the above.

7. Removal of Directors

The removal of a director of a Subsidiary and corporate Joint Venture Board will be at the discretion

of TCHC, as shareholder.

8. Director Roles and Responsibilities

Directors on Subsidiary and corporate Joint Venture Boards have the same fiduciary duties and

responsibilities as those of the TCHC Board, but with reference to the relevant Subsidiary and Joint

Venture. The Subsidiary and corporate Joint Venture Board must supervise management but not

supplant it. Generally speaking, Directors should review the business plans, assess the risks and

controls, review internal policies, review and approve financial statements, ensure legislative

compliance and sound governance. The Subsidiary and corporate Joint Venture Board is responsible

for the stewardship of the Subsidiary and Joint Venture, and owes a duty to act in its best interest with

due regard for the TCHC’s mandate and the fact that the Subsidiary and Joint Venture has been

created by TCHC as part of its mandate.

9. Board procedures

(a) Public and Closed Meetings

Subsidiaries

Consistent with Section 5.2 of the Shareholder Direction, meetings of a Subsidiary Board will be open

to the public, except where matters may be considered in camera for the reasons set out in Section

190 of the City of Toronto Act, 2006. Advance public notice of the agenda is required. These

principles are reflected in TCHC’s Board of Directors’ Meeting Procedures.

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Joint Ventures

In principle, with respect to Joint Ventures, matters discussed in Management Committee or directors’

meetings of a Joint Venture shall be considered in closed meeting, subject to compliance with the

applicable Joint Venture agreement and legal disclosure requirements.

(b) Frequency of Meetings and Reporting

For the purposes of this Framework, the following classification of Subsidiaries and Joint Ventures

has been established:

“Type 1” or “Holdco” means a Subsidiary, usually wholly-owned by TCHC, and for which there

is little to no operational activity taking place.

“Type 2” or “Operational” means a Subsidiary through which ongoing operational activities are

taking place.

“Type 3” or “Wind-Down” means a Subsidiary that is in the process of being wound-down or

dissolved. The TCHC Board, in its ongoing evaluation of the need for each Subsidiary, may decide

to wind-down and/or dissolve an inactive Subsidiary or a Subsidiary whose original purpose has

been achieved, or for other reasons.

“Type 4” or “Development” means a Joint Venture engaged wholly in development-type activities

for which TCHC generally has a 50% stake in, and, usually through a Holdco, jointly controls the

operations of the Joint Venture with another partner.

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Depending on the type of Subsidiary or Joint Venture, the frequency of meetings of a Subsidiary

Board or Management Committee (or, if applicable, directors of a Joint Venture or partners meetings)

and reporting to the TCHC Board will vary. Subject to the need for special or extraordinary meetings,

regularly scheduled meetings and reporting to the TCHC Board will be as follows:

Type 1 Subsidiaries -

Holdco

The Subsidiary Board shall meet and report to the TCHC Board on an

annual basis.

Type 2 Subsidiaries TCHC Management and the Subsidiary Board shall meet and report to

the TCHC Board on a quarterly basis.

Type 3 Subsidiaries As the Subsidiary is in the process of dissolution, meetings are not

required to be regularly scheduled, but will be held as needed.

Type 4 Joint Ventures -

Development

The Management Committee will meet on a regular basis, usually

monthly, to discuss the specific project that is the subject of the Joint

Venture agreement(s), and key decisions associated with such project.

The TCHC appointees on the Management Committee will report

monthly to TCHC. For corporate Joint Ventures, the directors will meet

at least annually to approve financial statements, and appoint officers,

and for other purposes and more frequently as required. The members

of the Joint Venture Board nominated by TCHC (who may be the same

individuals as the Management Committee nominees) will report

annually, or more frequently if required, to the TCHC Board.

10. Corporate Policies

(a) Conflict of Interest

The Directors and Officers of the Subsidiaries and Joint Ventures will strictly abide by the

requirements of the OBCA, the HSA (as applicable), and any related TCHC policy in respect of

conflicts of interest, including any requirements in respect of disclosure and abstention from voting.

(b) Code of Business Conduct and Ethics

The Directors and Officers of the Subsidiary and TCHC nominees of the Joint Ventures will abide by

the requirements of TCHC’s Code of Conduct Policy and will ensure that no confidential information

of the Subsidiary or Joint Venture is disclosed or otherwise made available to any Person, except as

permitted by the relevant Joint Venture agreement or as required by law.

The Subsidiary and corporate Joint Venture Board shall adopt a written code of business conduct and

ethics, applicable to directors, officers and employees of the Subsidiary that applies the same

principles as TCHC’s Code of Conduct, Conflict of Interest policies and TCHC’s Fraud Prevention

Directive.

(c) TCHC Policies

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To the extent possible, the Subsidiaries and Joint Ventures shall adopt policies in line with TCHC’s

policies where applicable.

11. Director Indemnification & Insurance

(a) Indemnification

Directors and Officers of TCHC have an indemnity agreement in place with TCHC that extends to

service on a Subsidiary Board.

The Subsidiary’s By-laws will also provide for indemnification of officers and directors.

(b) Insurance

TCHC maintains liability insurance for Officers and Directors of Subsidiaries. According to the

TCHC D&O policy, all Board members are covered for serving on the Boards of Subsidiaries that

operate on a not-for-profit basis and for which TCHC has, or controls, the right to elect more than

50% of the Board of Directors or other governing body of the entity. However, there are exceptions

where separate D&O policies may be in place for Subsidiaries controlled by TCHC that service third

party customers, and have potentially unique circumstances.

Coverage does not extend to TCHC’s Joint Ventures, where TCHC does not have majority control.

C. Matters Requiring TCHC Approval

In accordance with the provisions of the OBCA, there are matters that require the approval of TCHC,

as Parent. There may be additional matters that require TCHC approval which are specific to a

Subsidiary and addressed in its Subsidiary Shareholder Direction.

With respect to Joint Ventures, all decisions with respect to the Joint Venture will be made by the

Management Committee of the Joint Venture in accordance with the applicable Joint Venture

agreement.

D. Delegation by the Subsidiary Board

Subject to the OBCA, Articles, By-laws and the Shareholder Direction, the Subsidiary and the Joint

Venture Board may appoint officers of the Subsidiary and Joint Venture, and delegate to them

responsibility for managing the Subsidiary and Joint Venture’s business and affairs.

E. Financial and Other Reporting Requirements

Subsidiaries

The following are the reporting requirements for Type 1, Type 2, Type 3 Subsidiaries to the TCHC

Board (as indicated in table below), which, if applicable, shall be through the GCHRCC. These

requirements shall be included in the applicable Subsidiary Shareholder Direction.

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All Subsidiaries will submit their annual reports and financial statements in good time to allow TCHC

to meet its obligations under the Shareholder Direction:

Type 1, 2 and 3 Within no less than 180 days after the end of its fiscal year, the Subsidiary

shall prepare an Annual Report (reporting on performance against the

business plan, activities and services provided, variances to budget, and

enterprise risk mitigation strategy).

Type 1, 2 and 3 The Subsidiary shall deliver, within 180 days after the end of each fiscal

year, the financial statements of the Subsidiary in audited form as required

by TCHC for receipt by the TCHC Board, unless the TCHC Board

consents to an exemption from appointment and duties of the auditor in

respect of a fiscal year.

Type 2 An annual business/performance plan for the Subsidiary shall be delivered

no later than 180 days after the end each fiscal year.

Type 2 Quarterly reports on the status of the Subsidiary’s business, and progress

against the business plan, as applicable to the activity of the Subsidiary such

that there is sufficient operational activity to warrant quarterly reporting.

Type 2 A Business Plan (once every four years)

The audit level of assurance with respect to the financial statements prepared for Subsidiaries will be

as follows:

Type 1 Review level of assurance or notice to reader if there is minimal or no

activity.

Type 2 Audit level of assurance.

Type 3 Notice to reader.

Type 4 Audit level of assurance.

The Subsidiary Board will appoint a Corporate Secretary to be responsible for all returns and

regulatory filings and the safekeeping of documents.

Joint Ventures

For Joint Ventures, the reporting procedures and requirements may vary from one Joint Venture to

another, and will be set out in the applicable Joint Venture agreement.

IV. REVIEW CYCLE

As the mandates and goals of Subsidiaries and Joint Ventures may change over time, Subsidiaries

and Joint Ventures should undergo periodic reviews to ensure that the goals and benefits of their

separate existence are being achieved and, if not, whether they should continue to exist.

A review of the governance structure and board performance related to the Subsidiaries and Joint

Ventures will be completed by the GCHRCC in accordance with its Charter.

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Approval of Framework:

GCHRCC [insert date]

Board [insert date]



GCHRCC February 9, 2016 Meeting

Report: GCHRCC:2016-04 Attachment 1

APPENDIX “A” - GLOSSARY

In this Framework, the following words and phrases have the meanings set out below:

“Board” means the Board of Directors of TCHC.

“City Manager” means the City Manager of the City of Toronto or any person appointed to act in

the place of that individual or their delegate.

“Framework” means this Amended Subsidiary and Joint Venture Governance Framework.

“GCHRCC” means the Governance, Communications, Human Resources and Compensation

Committee of the TCHC Board.

“HSA” means the Housing Services Act.

“Joint Venture” means either (i) a corporation; (ii) a general or limited partnership; or (iii) any other

form of business enterprise with one or more third parties in which TCHC, or a Subsidiary, and such

third party or parties, have an equity interest and/or other investment; which investment is held for

active operating business purposes and not as a passive or portfolio investment.

“Management Committee” means the management committee of a Joint Venture, [to be comprised

of 4 individuals, 2 representatives from TCHC and 2 representatives from the Joint Venture partner].

“MFIPPA” means the Ontario Municipal Freedom of Information and Protection of Privacy Act.

“OBCA” means the Ontario Business Corporations Act.

“Parent” means, in reference to another corporation or other entity, a corporation that owns directly

or indirectly more than 50% of the outstanding securities or rights carrying exercisable voting rights

for the election of directors of that corporation or other entity.

“Person” means an individual, a natural person or a body corporate.

“Shareholder Direction” means the shareholder direction from the City of Toronto to TCHC, as

adopted by City Council in November 2013.

“Subsidiary” or “Subsidiaries” shall have the meaning ascribed to “subsidiary body corporate”

under the OBCA. For ease of reference, these terms refer to any body corporate of which TCHC is

the Parent.

“Subsidiary Board” means the board of directors of a Subsidiary.

2

“Subsidiary Shareholder Direction” means the shareholder direction between TCHC and the

Subsidiary.

“TCHC” means Toronto Community Housing Corporation, a corporation established under the laws

of the Province of Ontario.



GCHRCC February 9, 2016 Meeting

Report: GCHRCC:2016-04 Attachment 1

APPENDIX “B” –

Process for the Nomination and Appointment of Outside/Independent Directors

The Governance, Communications, Human Resources and Compensation Committee (“GCHRCC”)

shall follow the process described below for the appointment of outside, independent directors for

Subsidiaries and Joint Ventures of TCHC. For the purposes of this document, the terms “Subsidiary”

and “Joint Venture” have the meaning set out in the Amended Subsidiary and Joint Venture

Governance Framework.

(a) Rationale for Outside Directors

Generally, boards of wholly-owned Subsidiaries will be made up of directors and officers of TCHC.

Internal appointees have familiarity with the operations, initiatives, business process and risks of the

companies. The appointment of Subsidiary directors from TCHC’s directors and officers provides

for congruence between TCHC’s strategic direction and that of the Subsidiary. If there is a

requirement of increased objectivity on the board of the Subsidiary, it should come from cross-

business representation, from outside the business unit with oversight for the Subsidiary.

In exceptional circumstances, there may be a legal, regulatory, or capacity (specialized expertise,

time, and/or stakeholder representation) rationale that supports the inclusion of outside directors on

the Subsidiary Board. While the Board of Directors of TCHC and a Subsidiary will overlap, an

outside director may have the necessary time and expertise that the TCHC officers and directors do

not. Moreover, depending on the size, nature and risk profile of the business, the composition of a

Subsidiary Board may require stakeholder, service user, sector, or funding partners’ representation.

Having outside directors on the Subsidiary Board may provide some additional liability protection

for TCHC, and assist in minimizing conflict of interest scenarios on common issues with differing

implications to TCHC and the Subsidiary.

The decision about outside directors on the Subsidiary Board may be made at the point the decision

to establish a Subsidiary is made but should be flexible if the Subsidiary is already established, and

the need for outside directors may change with the circumstances affecting the Subsidiary, and will

be based on the legal, regulatory, or capacity rationale, in light of:

the needs of the specific board;

the interests of TCHC;

the type and impact of decisions made by the Subsidiary Board;

the financial risk factor; and

the perspectives, influences and expertise needed to deliver the mandate of the Subsidiary

Board.

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(b) Recruitment Process

The GCHRCC will recommend nominees for Subsidiary and Joint Venture Boards of directors in

accordance with its Charter, and the TCHC Board will have final approval of all nominations.

The mandate and subsequent composition requirements will guide the appropriate recruitment and

selection processes, which will vary by board.

The TCHC Board will want to make use of a process that is best suited to the specific requirements

of individual board compositions.

Any one or more of the following processes may be used for any given board:

an invitational nomination process whereby specific individuals are recruited by the TCHC

Board and invited to sit on the Subsidiary Board.

assistance of a search consultant to ensure specific skills and expertise are brought to the table.

open call where broader scope of board composition is desired.

proactive outreach to a specific stakeholder group to ensure appropriate representation where

stakeholder representation is desired because of the mandate of the Subsidiary.

(c) Qualifications

The directors of a Subsidiary and Joint Venture must meet the qualifications set out in the OBCA. To

remain on the board, appointees are required to maintain this status throughout their term of office.

The following guidelines will be considered by the TCHC Board in establishing other qualifications:

(a) should relate to the ability to perform the duties of the Subsidiary or Joint Venture Board,

including any necessary competencies;

(b) should be clear, yet flexible, defining areas of specialization where required, experience, or

community service; and

(c) skills and knowledge requirements pertinent to the mandate of the Subsidiary or Joint Venture.

(d) Selection Process

The GCHRCC will set out the qualifications relevant to the responsibilities of the Subsidiary and

Joint Venture Board and the TCHC Board will make appointments that ensure the directors possess

the range of skills and experience required to make effective decisions for the Subsidiary and Joint

Venture.

In making its recommendations, the GCHRCC should consider:

the competencies and skills that the Subsidiary or Joint Venture Board as a whole should

possess;

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the competencies and skills of each existing director;

the competencies and skills of each new nominee; and

whether the new nominee can devote sufficient time and resources to his or her duties as a

director.

item 10 amended subsidiary and joint venture governance

Documents