doing business in canada - Davies Ward Phillips & Vineberg LLP

Instrument 58-101. The practices recommended in the Governance Policy were recently reviewed by theCanadian Securities Administrators, who ultimately decided not to move forward with any changes. Accordingly,the policy adopted in 2005 remains in place.The Governance Policy recommends best practices in the following areas:• Board Independence - A majority of the board should be "independent". Generally speaking,independence means the absence of any direct or indirect material relationship between the directorand the issuer, that is, a relationship which could, in the view of the issuer's board, reasonably interferewith a member's independent judgment. Certain relationships are deemed to be material for thispurpose. The Governance Policy recommends regular in camera meetings for the independentdirectors and the separation of the positions of chair (who should be an independent director) andCEO. If these positions are not separated, an independent lead director should be appointed withappropriate responsibilities.• Role of the Board Generally - The board should have a written mandate that includes certain specifiedresponsibilities. These responsibilities relate to organizational integrity, strategic planning, riskidentification and management, succession planning, communications, internal controls, managementinformation systems and corporate governance.• Position Descriptions - The board should develop clear position descriptions for the chair of the boardand the chair of each board committee. The board, together with the CEO, should develop a clearposition description for the CEO.• Role of the Board in the Issuer's Integrity - The board should play an oversight role with respect to theethical framework of the organization. The board should satisfy itself as to the integrity of the CEO andother senior officers and that the CEO and other senior officers create a culture of integritythroughout the organization. A code of business conduct and ethics (and any amendments to thecode) should be approved by the board and any material departure from the code by a director orsenior officer may need to be publicly disclosed.• Board Effectiveness - There should be a comprehensive orientation program for new directors andongoing education for all directors as well as regular board, committee and director assessments.• Nominating Directors - The board should be responsible for nominating candidates for election by theshareholders. Before doing so, it should consider what competencies and skills the board requires aswell as the competencies and skills the board as a whole currently possesses. It should consider therecommendations of a nominating committee composed entirely of independent directors. In makingits recommendations, the nominating committee should also consider the competencies and skillsrequired and those currently in place, as well as those which any new nominee would bring to theboard. The nominating committee should have a written charter which includes certain specifiedprovisions.• Executive Compensation - The board should establish a compensation committee composed entirely ofindependent directors with a written charter and certain specified responsibilities. The compensationcommittee should be responsible for reviewing executive compensation disclosure before it is publiclydisclosed and for making recommendations to the board with respect to CEO compensation (based onestablished corporate goals and objectives), non-CEO compensation, incentive-based compensationplans and equity-based compensation plans.Corporate Governance 31