Exhibit 99.1
The Toronto-Dominion Bank
ANNUAL INFORMATION FORM
December 1, 2021
Documents Incorporated by Reference
Portions of this Annual Information Form (“AIF”) are disclosed in the annual consolidated financial statements (the “Annual Financial Statements”) and management’s discussion and analysis of the Bank (as defined below) for the year ended October 31, 2021 (the “2021 MD&A”) and are incorporated by reference into this AIF.
| Page Reference |
Page / Incorporated by Reference from Annual Financial Statements |
Page / Incorporated by Reference From 2021 MD&A |
||||||||||
| CORPORATE STRUCTURE |
||||||||||||
| Name, Address and Incorporation |
4 | – | – | |||||||||
| Intercorporate Relationships |
4 | – | – | |||||||||
| GENERAL DEVELOPMENT OF THE BUSINESS |
||||||||||||
| Three Year History |
4 | 3-7, 14-26 | ||||||||||
| DESCRIPTION OF THE BUSINESS |
||||||||||||
| Review of Business, including Foreign Operations |
– | 11-16 | 5, 14-26 | |||||||||
| Investment in The Charles Schwab Corporation |
5 | 66 | 5, 14, 20-23, 51-52 | |||||||||
| Competition |
– | – | 56-57 | |||||||||
| Intangible Properties |
– | 25, 29, 68-69 | – | |||||||||
| Average Number of Employees |
6 | – | – | |||||||||
| Lending |
– | – | 31-41, 64-68 | |||||||||
| Social and Environmental Policies |
6 | – | 90-91 | |||||||||
| Risk Factors |
6 | – | 52-91 | |||||||||
| DIVIDENDS |
||||||||||||
| Dividends per Share for the Bank (October 31st year-end) |
7 | – | – | |||||||||
| Dividends for Schwab (September 30th year-end) |
7 | – | – | |||||||||
| Dividend Restrictions |
8 | 77 | 45 | |||||||||
| CAPITAL STRUCTURE |
||||||||||||
| Common Shares |
8 | 73-75 | – | |||||||||
| Preferred Shares |
8 | 73-75 | – | |||||||||
| Limited Recourse Capital Notes |
9 | 73-75 | 48 | |||||||||
| Constraints |
10 | – | – | |||||||||
| Ratings |
11 | – | 80-81 | |||||||||
| MARKET FOR SECURITIES OF THE BANK |
||||||||||||
| Market Listings |
13 | – | – | |||||||||
| Trading Price and Volume |
13 | – | – | |||||||||
| Prior Sales |
14 | 74 | – | |||||||||
| ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTIONS ON TRANSFER |
14 | 68 | – | |||||||||
| DIRECTORS AND EXECUTIVE OFFICERS |
||||||||||||
| Directors and Board Committees of the Bank |
15 | – | – | |||||||||
| Audit Committee |
19 | – | – | |||||||||
| Additional Information Regarding the Audit Committee and Shareholders’ Auditor |
20 | – | – | |||||||||
| Executive Officers of the Bank |
21 | – | – | |||||||||
| Shareholdings of Directors and Executive Officers |
23 | – | – | |||||||||
| Additional Disclosure for Directors and Executive Officers |
23 | – | – | |||||||||
| Pre-Approval Policies and Shareholders’ Auditor Service Fees |
23 | – | – | |||||||||
| LEGAL PROCEEDINGS AND REGULATORY ACTIONS |
||||||||||||
| Legal Proceedings |
24 | 87-89 | – | |||||||||
| Regulatory Actions |
25 | – | – | |||||||||
| INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS |
25 | – | – | |||||||||
| TRANSFER AGENTS AND REGISTRARS |
||||||||||||
| Transfer Agent |
25 | – | – | |||||||||
| Co-transfer Agent and Registrar |
25 | – | – | |||||||||
| INTERESTS OF EXPERTS |
25 | – | – | |||||||||
| ADDITIONAL INFORMATION |
26 | – | – | |||||||||
APPENDIX “A” – Intercorporate Relationships
APPENDIX “B” – Description of Ratings
APPENDIX “C” – Audit Committee Charter
Unless otherwise specified, this AIF presents information as at October 31, 2021.
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Caution Regarding Forward-Looking Statements
From time to time, the Bank (as defined in this document) makes written and/or oral forward-looking statements, including in this document, in other filings with Canadian regulators or the United States (U.S.) Securities and Exchange Commission (SEC), and in other communications. In addition, representatives of the Bank may make forward-looking statements orally to analysts, investors, the media and others. All such statements are made pursuant to the “safe harbour” provisions of, and are intended to be forward-looking statements under, applicable Canadian and U.S. securities legislation, including the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements made in this document, the Management’s Discussion and Analysis (“2021 MD&A”) in the Bank’s 2021 Annual Report under the headings “Economic Summary and Outlook” and “The Bank’s Response to COVID-19”, for the Canadian Retail, U.S. Retail, and Wholesale Banking segments under the headings “Key Priorities for 2022” and “Operating Environment and Outlook”, and for the Corporate segment under the heading “Focus for 2022”, and in other statements regarding the Bank’s objectives and priorities for 2022 and beyond and strategies to achieve them, the regulatory environment in which the Bank operates, the Bank’s anticipated financial performance, and the potential economic, financial and other impacts of the Coronavirus Disease 2019 (COVID-19). Forward-looking statements are typically identified by words such as “will”, “would”, “should”, “believe”, “expect”, “anticipate”, “intend”, “estimate”, “plan”, “goal”, “target”, “may”, and “could”.
By their very nature, these forward-looking statements require the Bank to make assumptions and are subject to inherent risks and uncertainties, general and specific. Especially in light of the uncertainty related to the physical, financial, economic, political, and regulatory environments, such risks and uncertainties – many of which are beyond the Bank’s control and the effects of which can be difficult to predict – may cause actual results to differ materially from the expectations expressed in the forward-looking statements. Risk factors that could cause, individually or in the aggregate, such differences include: strategic, credit, market (including equity, commodity, foreign exchange, interest rate, and credit spreads), operational (including technology, cyber security, and infrastructure), model, insurance, liquidity, capital adequacy, legal, regulatory compliance and conduct, reputational, environmental and social, and other risks. Examples of such risk factors include the economic, financial, and other impacts of pandemics, including the COVID-19 pandemic; general business and economic conditions in the regions in which the Bank operates; geopolitical risk; the ability of the Bank to execute on long-term strategies and shorter-term key strategic priorities, including the successful completion of acquisitions and dispositions, business retention plans, and strategic plans; technology and cyber security risk (including cyber-attacks or data security breaches) on the Bank’s information technology, internet, network access or other voice or data communications systems or services; model risk; fraud activity; the failure of third parties to comply with their obligations to the Bank or its affiliates, including relating to the care and control of information, and other risks arising from the Bank’s use of third-party service providers; the impact of new and changes to, or application of, current laws and regulations, including without limitation tax laws, capital guidelines and liquidity regulatory guidance and the bank recapitalization “bail-in” regime; regulatory oversight and compliance risk; increased competition from incumbents and new entrants (including Fintechs and big technology competitors); shifts in consumer attitudes and disruptive technology; exposure related to significant litigation and regulatory matters; ability of the Bank to attract, develop, and retain key talent; changes to the Bank’s credit ratings; changes in currency and interest rates (including the possibility of negative interest rates); increased funding costs and market volatility due to market illiquidity and competition for funding; Interbank Offered Rate (IBOR) transition risk; critical accounting estimates and changes to accounting standards, policies, and methods used by the Bank; existing and potential international debt crises; environmental and social risk (including climate change); and the occurrence of natural and unnatural catastrophic events and claims resulting from such events. The Bank cautions that the preceding list is not exhaustive of all possible risk factors and other factors could also adversely affect the Bank’s results. For more detailed information, please refer to the “Risk Factors and Management” section of the 2021 MD&A, as may be updated in subsequently filed quarterly reports to shareholders and news releases (as applicable) related to any events or transactions discussed under the heading “Significant Acquisitions” or “Significant and Subsequent Events and Pending Acquisitions” in the relevant MD&A, which applicable releases may be found on www.td.com. All such factors, as well as other uncertainties and potential events, and the inherent uncertainty of forward-
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looking statements, should be considered carefully when making decisions with respect to the Bank. The Bank cautions readers not to place undue reliance on the Bank’s forward-looking statements.
Material economic assumptions underlying the forward-looking statements contained in this document are set out in the 2021 MD&A under the headings “Economic Summary and Outlook” and “The Bank’s Response to COVID-19”, for the Canadian Retail, U.S. Retail, and Wholesale Banking segments, “Key Priorities for 2022” and “Operating Environment and Outlook”, and for the Corporate segment, “Focus for 2022”, each as may be updated in subsequently filed quarterly reports to shareholders.
Any forward-looking statements contained in this document represent the views of management only as of the date hereof and are presented for the purpose of assisting the Bank’s shareholders and analysts in understanding the Bank’s financial position, objectives and priorities and anticipated financial performance as at and for the periods ended on the dates presented, and may not be appropriate for other purposes. The Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on its behalf, except as required under applicable securities legislation.
CORPORATE STRUCTURE
Name, Address and Incorporation
The Toronto-Dominion Bank (the “Bank” or “TD”) and its subsidiaries are collectively known as “TD Bank Group”. The Bank, a Schedule 1 chartered bank subject to the provisions of the Bank Act (Canada) (the “Bank Act”), was formed on February 1, 1955 through the amalgamation of The Bank of Toronto (chartered in 1855) and The Dominion Bank (chartered in 1869). The Bank’s head office is located at Toronto-Dominion Centre, King Street West and Bay Street, Toronto, Ontario, M5K 1A2.
Intercorporate Relationships
Information about the intercorporate relationships among the Bank and its principal subsidiaries is provided in Appendix “A” to this AIF.
GENERAL DEVELOPMENT OF THE BUSINESS
Three Year History
The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group (“TD” or the “Bank”). TD is the fifth largest bank in North America by assets and serves more than 26 million customers in three key businesses operating in a number of locations in financial centres around the globe: Canadian Retail, including TD Canada Trust, TD Auto Finance Canada, TD Wealth (Canada), TD Direct Investing, and TD Insurance; U.S. Retail, including TD Bank, America’s Most Convenient Bank®, TD Auto Finance U.S., TD Wealth (U.S.), and an investment in The Charles Schwab Corporation; and Wholesale Banking, including TD Securities. TD also ranks among the world’s leading online financial services firms, with more than 15 million active online and mobile customers. TD had CDN$1.7 trillion in assets on October 31, 2021. The Toronto-Dominion Bank trades under the symbol “TD” on the Toronto and New York Stock Exchanges.
TD Bank, N.A., operating under the brand name TD Bank, America’s Most Convenient Bank®, is one of the 10 largest banks in the U.S. and provides customers with a full range of financial products and services at more than 1,100 convenient locations located throughout the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida. TD Bank, N.A. is a wholly owned subsidiary of the Bank.
For additional information on TD’s businesses, see the descriptions provided below and on pages 3 to 7 and 14 to 26 of the 2021 MD&A.
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On November 1, 2018, the Bank completed its acquisition of Greystone Capital Management Inc., the parent company of Greystone Managed Investments Inc., a Canadian institutional asset manager based in Regina, Saskatchewan.
On January 10, 2019, the Bank entered into a long-term loyalty program agreement (the “Loyalty Agreement”) with Air Canada. Under the terms of the Loyalty Agreement, the Bank will be the primary credit card issuer for Air Canada’s new loyalty program which launched in November 2020 through to 2030, subject to extension under certain circumstances. The Loyalty Agreement was entered into in conjunction with Air Canada’s acquisition of Aimia Canada Inc., which previously operated the Aeroplan loyalty business, for an aggregate purchase price of $450 million in cash and the assumption of approximately $1.9 billion of Aeroplan Miles liability.
On October 6, 2020, The Charles Schwab Corporation (“Schwab”) completed its acquisition of TD Ameritrade Holding Corporation (“TD Ameritrade”), of which the Bank was a major shareholder (the “Schwab transaction”). Upon closing, the Bank exchanged its approximate 43% ownership in TD Ameritrade for an approximate 13.5% stake in Schwab, consisting of 9.9% voting common shares and the remainder in non-voting common shares, convertible into voting common shares upon transfer to a third party.
The Bank and Schwab are party to a stockholder agreement (the “Stockholder Agreement”), which became effective upon closing of the Schwab transaction. Under the Stockholder Agreement: (i) subject to meeting certain conditions, the Bank has two seats on Schwab’s Board of Directors, which seats are currently held by Mr. Bharat Masrani and Mr. Brian Levitt, (ii) the TD Bank Group is not permitted to own more than 9.9% voting common shares of Schwab, and (iii) the Bank is subject to customary standstill restrictions and, subject to certain exceptions, transfer restrictions.
In addition, on November 25, 2019, the Bank and Schwab entered into an insured deposit account agreement, which became effective upon closing of the Schwab transaction and has an initial expiration date of July 1, 2031.
On May 1, 2021, the Bank completed its acquisition of Wells Fargo’s Canadian direct equipment finance business.
On July 1, 2021, the Bank completed its acquisition of Headlands Tech Global Markets, LLC, a Chicago-based quantitative fixed income trading company.
DESCRIPTION OF THE BUSINESS
Descriptions of TD’s significant business segments and related information are provided on pages 3 and 14 to 26 of the 2021 MD&A.
Investment in The Charles Schwab Corporation
Upon closing of the Schwab transaction on October 6, 2020, the Bank exchanged its approximate 43% ownership in TD Ameritrade for an approximate 13.5% stake in Schwab, consisting of 9.9% voting common shares and the remainder in non-voting common shares, convertible into voting common shares upon transfer to a third party. The Bank owned an approximate 13.41% stake in Schwab as at October 31, 2021.
Schwab is a leading provider of financial services. Through its subsidiaries, Schwab provides a full range of wealth management, securities brokerage, banking, asset management, custody, and financial advisory services to individual investors and independent investment advisors. Schwab is a U.S. publicly-traded company and its common stock is listed on The New York Stock Exchange.
The Bank’s investment in Schwab is subject to a Stockholder Agreement that contains provisions relating to governance, board composition, stock ownership, transfers of shares, voting and other matters.
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Average Number of Employees
TD had an average of 89,464 full-time equivalent employees for fiscal 2021.
Social and Environmental Policies
The Bank publishes an Environmental, Social and Governance Report outlining the Bank’s social and environmental policies and strategies. This report and other related information is available on the Bank’s website. Additional information about the Bank’s social and environmental policies can be found under “Environmental and Social Risk” on pages 90-91 of the 2021 MD&A, which is incorporated by reference.
Risk Factors
The Bank considers it critical to regularly assess its operating environment and highlight top and emerging risks, which are risks with a potential to have a material effect on the Bank and where the attention of senior leaders is focused due to the potential magnitude or immediacy of their impact. An explanation of the types of risks facing the Bank and its businesses and the ways in which the Bank manages them can be found under the heading “Risk Factors and Management” on pages 52-91 of the 2021 MD&A, which is incorporated by reference.
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DIVIDENDS
Dividends per Share for the Bank (October 31st year-end)
| Type of Shares | 2021 | 2020 | 2019 | |||||||||
| Common Shares |
$ | 3.16 | $ | 3.11 | $ | 2.89 | ||||||
| Class A First Preferred Shares (Non-Viability Contingent Capital) |
| |||||||||||
| Series 1 |
$ | 0.92 | $ | 0.92 | $ | 0.98 | ||||||
| Series 3 |
$ | 0.92 | $ | 0.92 | $ | 0.94 | ||||||
| Series 5 |
$ | 0.97 | $ | 0.96 | $ | 0.94 | ||||||
| Series 7 |
$ | 0.80 | $ | 0.88 | $ | 0.90 | ||||||
| Series 9 |
$ | 0.81 | $ | 0.93 | $ | 0.93 | ||||||
| Series 111 |
$ | 0.00 | $ | 1.23 | $ | 1.23 | ||||||
| Series 122 |
$ | 0.69 | $ | 1.38 | $ | 1.38 | ||||||
| Series 143 |
$ | 1.21 | $ | 1.21 | $ | 1.21 | ||||||
| Series 16 |
$ | 1.13 | $ | 1.13 | $ | 1.13 | ||||||
| Series 18 |
$ | 1.18 | $ | 1.18 | $ | 1.18 | ||||||
| Series 20 |
$ | 1.19 | $ | 1.19 | $ | 1.35 | ||||||
| Series 22 |
$ | 1.30 | $ | 1.30 | $ | 0.98 | ||||||
| Series 24 |
$ | 1.28 | $ | 1.28 | $ | 0.52 | ||||||
| Series 264 |
– | – | – | |||||||||
Notes:
| 1 | On October 31, 2020, the Bank redeemed all of its 6,000,000 outstanding Non-Cumulative Class A First Preferred Shares, Series 11 (NVCC). |
| 2 | On April 30, 2021, the Bank redeemed all of its 28,000,000 outstanding Non-Cumulative Class A First Preferred Shares, Series 12 (NVCC). |
| 3 | On October 31, 2021, the Bank redeemed all of its 40,000,000 outstanding Non-Cumulative Class A First Preferred Shares, Series 14 (NVCC). |
| 4 | The Class A First Preferred Shares, Series 26 (NVCC) were issued on July 29, 2021 to a limited recourse trust, in connection with the issuance of limited recourse capital notes. Until revoked, the trustee of the limited recourse trust has waived its right to receive any and all dividends on the Class A First Preferred Shares, Series 26 (NVCC). Until such waiver is revoked by the trustee of the limited recourse trust, no dividends are expected to be declared or paid on the Class A First Preferred Shares, Series 26 (NVCC). |
Dividends for Schwab (September 30th year-end)
Schwab declared a US$0.18 per share quarterly cash dividend on its common stock during each quarter of its 2021 fiscal year.
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Dividend Restrictions
The Bank is prohibited by the Bank Act from declaring dividends on its preferred or common shares if there are reasonable grounds for believing that the Bank is, or the payment would cause the Bank to be, in contravention of the capital adequacy and liquidity regulations of the Bank Act or directions of OSFI. In addition, the ability to pay dividends on common shares without the approval of the holders of the outstanding preferred shares is restricted unless all dividends on the preferred shares have been declared and paid or set apart for payment.
CAPITAL STRUCTURE
The following summarizes certain provisions of the Bank’s common shares, preferred shares and limited recourse capital notes. This summary is qualified in its entirety by the Bank’s by-laws and the actual terms and conditions of such securities. For more information on the Bank’s capital structure, see pages 42 to 49 of the 2021 MD&A and Notes 19, 20 and 21 of the 2021 Financial Statements. The Bank incorporates those pages and Notes herein by reference.
In accordance with capital adequacy requirements adopted by the Office of the Superintendent of Financial Institutions (Canada) (“OSFI”), in order to qualify as Tier 1 or Tier 2 Capital under Basel III, non-common capital instruments issued by the Bank after January 1, 2013, including Preferred Shares (as defined below) and Subordinated Debentures (Medium Term Notes with NVCC Provisions, defined below), must include a non-viability contingent capital feature (the “NVCC Provisions”), under which they could be converted into a variable number of common shares of the Bank if OSFI announces that the Bank has ceased, or is about to cease, to be viable or if the Bank has accepted or agreed to accept a capital injection or equivalent support from a federal or provincial government in Canada (each, a “trigger event”).
Common Shares
The authorized common share capital of the Bank consists of an unlimited number of common shares without nominal or par value.
Voting Rights
Subject to the restrictions set out under “Constraints” below, holders of common shares are entitled to vote at all meetings of the shareholders of the Bank, except meetings at which only holders of a specified class or series of shares are entitled to vote.
Dividend Rights
The holders of common shares are entitled to receive dividends as and when declared by the Board, subject to the preference of the holders of the Preferred Shares of the Bank.
Rights on Liquidation
After payment to the holders of the Preferred Shares of the Bank of the amount or amounts to which they may be entitled, and after payment of all outstanding debts, the holders of common shares shall be entitled to receive the remaining property of the Bank upon the liquidation, dissolution or winding-up thereof.
Preferred Shares
The Bank is authorized to issue an unlimited number of Class A First Preferred Shares (the “Preferred Shares”), without nominal or par value.
The Preferred Shares of the Bank may be issued from time to time, in one or more series, with such rights, privileges, restrictions and conditions as the Board may determine.
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Priority
The Preferred Shares of each series rank on a parity with every other series of Preferred Shares, and all Preferred Shares rank prior to the common shares and to any other shares of the Bank ranking junior to the Preferred Shares with respect to the payment of dividends and the distribution of assets in the event of the liquidation, dissolution or winding-up of the Bank, provided that a trigger event has not occurred as contemplated under the NVCC Provisions applicable to a series of Preferred Shares. In the event of a trigger event occurring under the NVCC Provisions, the existing priority of the Preferred Shares of the affected series will not be relevant as all Preferred Shares of such series will be converted into common shares of the Bank and, upon conversion, will rank on a parity with all other common shares of the Bank.
Voting Rights
There are no voting rights attaching to the Preferred Shares except to the extent provided in any series or by the Bank Act. The Bank may not, without the prior approval of the holders of the Preferred Shares, create or issue (i) any shares ranking in priority to or on a parity with the Preferred Shares, or (ii) any additional series of Preferred Shares, unless at the date of such creation or issuance all cumulative dividends and any declared and unpaid non-cumulative dividends shall have been paid or set apart for payment in respect of each series of Preferred Shares then issued and outstanding.
Approval of amendments to the provisions of the Preferred Shares as a class may be given in writing by the holders of all the outstanding Preferred Shares or by a resolution carried by an affirmative vote of at least two-thirds of the votes cast at a meeting at which the holders of a majority of the then outstanding Preferred Shares are present or represented by proxy or, if no quorum is present at such meeting, at an adjourned meeting at which the shareholders then present or represented by proxy may transact the business for which the meeting was originally called.
Rights on Liquidation
In the event of the liquidation, dissolution or winding-up of the Bank, provided that a trigger event has not occurred as contemplated under the NVCC Provisions applicable to a series of Preferred Shares, before any amounts shall be paid to or any assets distributed among the holders of the common shares or shares of any other class of the Bank ranking junior to the Preferred Shares, the holder of a Preferred Share of a series shall be entitled to receive, to the extent provided for with respect to such Preferred Shares by the conditions attaching to such series: (i) an amount equal to the amount paid up thereon; (ii) such premium, if any, as has been provided for with respect to the Preferred Shares of such series; and (iii) all unpaid cumulative dividends, if any, on such Preferred Shares and, in the case of non-cumulative Preferred Shares, all declared and unpaid non-cumulative dividends. After payment to the holders of the Preferred Shares of the amounts so payable to them, they shall not be entitled to share in any further distribution of the property or assets of the Bank.
Limited Recourse Capital Notes
The Bank currently has outstanding $1,750 million of Limited Recourse Capital Notes NVCC, Series 1 (the “LRCNs”) with recourse limited to assets held in a trust consolidated by the Bank (the “Limited Recourse Trust”). The Limited Recourse Trust’s assets consist of $1,750 million of the Bank’s Non-Cumulative 5-Year Fixed Rate Reset Preferred Shares NVCC, Series 26 (“Preferred Shares Series 26”) at a price of $1,000 per share, issued concurrently with the LRCNs.
In the event of (i) non-payment of interest following any interest payment date, (ii) non-payment of the redemption price in case of a redemption of the LRCNs, (iii) non-payment of principal plus accrued and unpaid interest at the maturity of the LRCNs, (iv) an event of default on the LRCNs, or (v) a Trigger Event (each, a “Recourse Event”), the recourse of each LRCN holder will be limited to that holder’s pro rata
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share of the Limited Recourse Trust’s assets. A Trigger Event is defined as an event where OSFI determines that the Bank is, or is about to become, non-viable and that after conversion of all non-common capital instruments, the viability of the Bank is expected to be restored, or if the Bank has accepted or agreed to accept a capital injection or equivalent support from a federal or provincial government of Canada without which the Bank would have been determined by OSFI to be non-viable.
The LRCNs, by virtue of the recourse to the Preferred Shares Series 26, include standard NVCC provisions necessary for them to qualify as Additional Tier 1 Capital under OSFI’s Capital Adequacy Requirements guideline. NVCC provisions require the conversion of the instrument into a variable number of common shares upon the occurrence of a Trigger Event. In such an event, each Preferred Share Series 26 held in the Limited Recourse Trust will automatically and immediately be converted into a variable number of common shares which will be delivered to LRCN holders in satisfaction of the principal amount of, and accrued and unpaid interest on, the LRCNs. The number of common shares issued will be determined based on the conversion formula set out in the terms of the Preferred Shares Series 26. The LRCNs are compound instruments with both equity and liability features as payments of interest and principal in cash are made at the Bank’s discretion. Non-payment of interest and principal in cash does not constitute an event of default and will trigger the delivery of Preferred Shares Series 26.
Constraints
There are no constraints imposed on the ownership of securities of the Bank to ensure that the Bank has a required level of Canadian ownership. However, the Bank Act contains restrictions on the issue, transfer, acquisition, beneficial ownership and voting of all shares of a chartered bank. For example, no person shall be a major shareholder of a bank if the bank has equity of $12 billion or more. A person is a major shareholder of a bank where:
(i) the aggregate of shares of any class of voting shares beneficially owned by that person, by entities controlled by that person and by any person associated or acting jointly or in concert with that person is more than 20% of that class of voting shares; or
(ii) the aggregate of shares of any class of non-voting shares beneficially owned by that person, by entities controlled by that person and by any person associated or acting jointly or in concert with that person is more than 30% of that class of non-voting shares. No person shall have a significant interest in any class of shares of a bank, including the Bank, unless the person first receives the approval of the Minister of Finance (Canada).
For purposes of the Bank Act, a person has a significant interest in a class of shares of a Canadian chartered bank where the aggregate of any shares of the class beneficially owned by that person, by entities controlled by that person and by any person associated or acting jointly or in concert with that person exceeds 10% of all of the outstanding shares of that class of shares of such bank.
The Bank Act also prohibits the registration of a transfer or issue of any share of the Bank to, and the exercise in person or by proxy of any voting rights attached to any share of the Bank that is beneficially owned by, Her Majesty in right of Canada or of a province or any agent or agency of Her Majesty, in either of those rights, or to the government of a foreign country or any political subdivision thereof, or any agent or agency of a foreign government. Notwithstanding the foregoing, the Minister of Finance of Canada may approve the issue of shares of a bank, including the Bank, to an agent that is an “eligible agent”, which is defined as an agent or agency of Her Majesty in right of Canada or of a province or an agent or agency of a government of a foreign country or any political subdivision of a foreign country: (i) whose mandate is publicly available; (ii) that controls the assets of an investment fund in a manner intended to maximize long-term risk-adjusted returns and Her Majesty in right of Canada or of a province or an agent or agency of a government of a foreign country or any political subdivision of a foreign country contributes to the fund or the fund is established to provide compensation, hospitalization, medical care, annuities, pensions or similar benefits to natural persons; and (iii) whose decisions with respect to the assets of the fund referred to in (ii) above are not influenced in any significant way by Her Majesty in right of Canada or of the province or the government of the foreign country or the political subdivision. The application for this approval would be made jointly by the Bank and the eligible agent.
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Ratings
Credit ratings are important to the Bank’s borrowing costs and ability to raise funds. Rating downgrades could potentially result in higher financing costs and increased collateral pledging requirements for the Bank and reduced access to capital markets. Rating downgrades may also affect the Bank’s ability to enter into normal course derivative transactions. The Bank regularly reviews the level of increased collateral that would be required in the event of rating downgrades and holds liquid assets to cover additional collateral required in the event of certain downgrades in the Bank’s senior long-term credit ratings. Additional information relating to credit ratings is provided under the heading “Liquidity Risk” in the “Managing Risk” section starting on pages 77 to 87 of the 2021 MD&A.
As at October 31, 2021, The Toronto-Dominion Bank (TD) had the following solicited ratings from the rating agencies listed below:
| Rating | Rank* | |||||||||||||||
| Moody’s Investor Service |
Legacy Senior Debt1 | Aa2 | 3 of 21 | |||||||||||||
| Senior Debt2 | A1 | 5 of 21 | ||||||||||||||
| Short Term Debt | P-1 | 1 of 4 | ||||||||||||||
| Subordinated Debt | A2 | 6 of 21 | ||||||||||||||
| Subordinated Debt–NVCC | A2 (hyb) | 6 of 21 | ||||||||||||||
| Preferred Shares–NVCC | Baa1 (hyb) | 8 of 21 | ||||||||||||||
| Limited Recourse Capital Notes–NVCC | Baa1 (hyb) | 8 of 21 | ||||||||||||||
| Outlook | Stable | |||||||||||||||
|
|
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| Rating | Rank* | |||||||||||||||
| Standard & Poor’s |
Legacy Senior Debt1 | AA- | 4 of 22 | |||||||||||||
| Senior Debt2 | A | 6 of 22 | ||||||||||||||
| Short Term Debt | A-1+ | 1 of 8 | ||||||||||||||
| Subordinated Debt | A | 6 of 22 | ||||||||||||||
| Subordinated Debt–NVCC | A- | 7 of 22 | ||||||||||||||
| Preferred Shares–NVCC | BBB | 9 of 22 | ||||||||||||||
| Limited Recourse Capital Notes–NVCC | BBB | 9 of 22 | ||||||||||||||
| Outlook | Stable | |||||||||||||||
|
|
||||||||||||||||
| Rating | Rank* | |||||||||||||||
| DBRS |
Legacy Senior Debt1 | AA (high) | 2 of 26 | |||||||||||||
| Senior Debt2 | AA | 3 of 26 | ||||||||||||||
| Short Term Debt | R-1 (high) | 1 of 10 | ||||||||||||||
| Subordinated Debt | AA (low) | 4 of 26 | ||||||||||||||
| Subordinated Debt–NVCC | A | 6 of 26 | ||||||||||||||
| Preferred Shares–NVCC | Pfd-2 (high) | 4 of 16 | ||||||||||||||
| Limited Recourse Capital Notes–NVCC | A (low) | 7 of 26 | ||||||||||||||
| Outlook | Stable | |||||||||||||||
* Relative rank of each rating within the rating agency’s overall classification system.
- 11 -
Notes:
| 1. | Includes: (a) Senior debt issued prior to September 23, 2018; and (b) Senior debt issued on or after September 23, 2018 which is excluded from the bank recapitalization “bail-in” regime, including debt with an original term to maturity of less than 400 days and most structured notes. |
| 2. | Subject to conversion under the bank recapitalization “bail-in” regime. |
Fitch Ratings (“Fitch”) continues to provide unsolicited ratings for TD; however, TD does participate in the ratings process. As of October 31, 2021, Fitch rated TD senior unsecured long-term debt at ‘AA-’ (ranking 4 of 23), short-term rating of ‘F1+’ (ranking 1 of 8), subordinated long-term debt at ‘A’ (ranking of 6 of 23), and a ‘Stable’ outlook.
Credit ratings are not recommendations to purchase, sell or hold a financial obligation in as much as they do not comment on market price or suitability for a particular investor. Ratings are subject to revision or withdrawal at any time by the rating agency. Credit ratings and outlooks provided by the rating agencies reflect their views and are subject to change from time to time, based on a number of factors, including the Bank’s financial strength, competitive position and liquidity as well as factors not entirely within the Bank’s control, including the methodologies used by the rating agencies and conditions affecting the financial services industry generally.
As is common practice, the Bank has made payments in the ordinary course to the rating agencies listed above in connection with the assignment of ratings on the securities of the Bank. In addition, the Bank has made customary payments in respect of certain other services provided to the Bank by the applicable rating agencies during the last two years.
A definition of the categories of each rating as at October 31, 2021 has been obtained from the respective rating agency’s website and is outlined in Appendix B, and a more detailed explanation may be obtained from the applicable rating agency. We note that the definition of the ratings categories for the respective rating agencies are provided solely in order to satisfy requirements of Canadian law and do not constitute an endorsement by the Bank of the ratings categories or of the application by the respective rating agencies of their criteria and analyses.
- 12 -
MARKET FOR SECURITIES OF THE BANK
Market Listings
The Bank’s common shares are listed on the Toronto Stock Exchange and the New York Stock Exchange. Except for the Class A First Preferred Shares, Series 26 (NVCC), which are not listed on an exchange, the Bank’s Preferred Shares are listed on the Toronto Stock Exchange.
Trading Price and Volume
Trading price and volume of the Bank’s securities on the Toronto Stock Exchange in the past year is set out in the tables below:
|
COMMON SHARES
| ||||||||||||||||||||||||
|
Nov.
|
Dec.
|
Jan.
|
Feb.
|
March
|
April
|
May
|
June
|
July
|
Aug.
|
Sept.
|
Oct.
| |||||||||||||
|
High ($) |
71.55 | 72.62 | 76.05 | 79.94 | 83.65 | 85.51 | 89.12 | 88.56 | 87.70 | 86.80 | 85.45 | 90.70 | ||||||||||||
|
Low ($) |
58.56 | 70.25 | 71.65 | 72.39 | 77.64 | 81.70 | 83.40 | 86.59 | 81.34 | 81.91 | 80.68 | 84.05 | ||||||||||||
|
Vol.(‘000) |
116,134 | 107,338 | 164,019 | 89,124 | 157,737 | 146,416 | 86,268 | 87,335 | 132,398 | 66,680 | 89,535 | 162,749 | ||||||||||||
|
Class A First Preferred Shares (Non-Viability Contingent Capital)
| ||||||||||||||||||||||||
| Nov.
|
Dec.
|
Jan.
|
Feb.
|
March
|
April
|
May
|
June
|
July
|
Aug.
|
Sept.
|
Oct.
| |||||||||||||
|
Series 1 High ($) Low ($) Vol.(‘000) |
19.50 17.68 341 |
20.87 19.40 974 |
21.20 20.55 429 |
23.06 21.07 431 |
23.20 22.46 1,182 |
23.15 22.52 426 |
23.99 23.05 198 |
24.30 23.41 410 |
24.00 23.44 179 |
24.25 23.54 125 |
24.49 23.90 501 |
24.66 24.02 467 | ||||||||||||
|
Series 3 High ($) Low ($) Vol.(‘000) |
19.50 17.64 327 |
20.67 19.40 1,347 |
21.20 20.34 237 |
22.95 20.97 276 |
23.15 22.42 407 |
23.13 22.40 383 |
23.94 23.11 377 |
24.43 23.42 171 |
23.93 23.50 170 |
24.25 23.50 174 |
24.49 23.90 103 |
24.84 24.11 146 | ||||||||||||
|
Series 5 High ($) Low ($) Vol.(‘000) |
20.21 18.22 252 |
20.99 19.90 381 |
21.25 20.34 251 |
22.88 21.06 353 |
23.30 22.42 474 |
23.44 22.55 432 |
24.00 23.33 223 |
24.40 23.40 206 |
24.00 23.61 169 |
24.40 23.65 242 |
24.82 24.06 264 |
24.75 24.35 404 | ||||||||||||
|
Series 7 High ($) Low ($) Vol.(‘000) |
20.57 19.45 69 |
22.48 20.55 379 |
22.89 22.35 84 |
23.87 22.62 685 |
24.24 23.67 174 |
24.22 23.51 129 |
24.60 23.80 542 |
24.80 23.90 144 |
24.56 23.85 115 |
25.06 24.22 297 |
25.09 24.56 160 |
25.20 24.77 228 | ||||||||||||
|
Series 9 High ($) Low ($) Vol.(‘000) |
21.40 20.18 41 |
23.48 21.06 56 |
23.50 22.87 52 |
24.00 23.11 347 |
24.25 23.50 107 |
24.34 23.56 78 |
24.75 24.11 153 |
24.87 23.39 191 |
24.61 23.95 82 |
25.27 24.43 93 |
25.19 24.82 62 |
25.28 24.95 73 | ||||||||||||
|
Series 121 High ($) Low ($) Vol.(‘000) |
25.49 25.27 856 |
25.60 25.40 897 |
25.59 25.15 695 |
25.36 25.19 792 |
25.35 25.23 1,183 |
25.38 24.97 713 |
—
|
—
|
—
|
—
|
—
|
—
| ||||||||||||
|
Series 142 High ($) Low ($) Vol.(‘000) |
25.65 25.00 435 |
25.77 25.44 637 |
25.80 25.15 911 |
25.61 25.42 746 |
25.75 25.47 1,326 |
25.75 25.30 520 |
25.49 25.34 2,174 |
25.61 25.38 416 |
25.54 25.17 377 |
25.31 25.20 517 |
25.30 25.23 526 |
25.30 24.98 438 | ||||||||||||
- 13 -
|
Class A First Preferred Shares (Non-Viability Contingent Capital)
| ||||||||||||||||||||||||
| Nov.
|
Dec.
|
Jan.
|
Feb.
|
March
|
April
|
May
|
June
|
July
|
Aug.
|
Sept.
|
Oct.
| |||||||||||||
|
Series 16 High ($) Low ($) Vol.(‘000) |
23.95 22.08 99 |
24.48 23.51 308 |
24.71 23.74 287 |
24.95 24.50 336 |
24.45 24.55 355 |
25.58 24.91 242 |
26.00 25.13 146 |
26.09 25.27 196 |
25.89 25.36 117 |
26.04 25.42 133 |
25.79 25.43 69 |
26.04 25.55 123 | ||||||||||||
|
Series 18 High ($) Low ($) Vol.(‘000) |
21.27 20.35 585 |
23.06 21.25 254 |
23.40 22.79 669 |
24.44 23.00 292 |
24.92 24.25 383 |
25.10 24.53 239 |
25.48 24.85 162 |
25.88 25.10 60 |
25.47 24.75 85 |
26.01 25.23 104 |
25.94 25.31 199 |
25.75 25.23 144 | ||||||||||||
|
Series 20 High ($) Low ($) Vol.(‘000) |
21.30 19.90 107 |
22.98 21.20 191 |
22.82 22.13 404 |
24.14 22.70 401 |
24.59 23.90 292 |
24.84 24.10 373 |
25.20 24.72 284 |
25.39 25.00 221 |
25.53 24.64 277 |
25.93 25.03 250 |
25.70 25.12 131 |
25.66 25.14 130 | ||||||||||||
|
Series 22 High ($) Low ($) Vol.(‘000) |
25.20 24.28 155 |
25.35 24.95 233 |
25.59 25.11 395 |
25.72 25.25 166 |
26.19 25.30 186 |
26.29 25.79 474 |
26.83 25.99 270 |
27.00 26.02 126 |
26.84 25.89 134 |
27.01 26.27 105 |
26.88 26.25 133 |
27.07 26.35 129 | ||||||||||||
|
Series 24 High ($) Low ($) Vol.(‘000) |
25.40 24.78 172 |
25.72 25.20 452 |
26.05 25.36 165 |
26.15 25.60 115 |
26.64 25.78 445 |
26.31 25.79 339 |
27.14 26.19 562 |
27.20 26.40 166 |
27.12 25.86 122 |
27.33 26.59 124 |
27.33 26.61 193 |
27.38 26.80 140 | ||||||||||||
Notes:
| 1. | On April 30, 2021, the Bank redeemed all of its 28,000,000 outstanding Non-Cumulative Class A First Preferred Shares, Series 12 (NVCC). |
| 2. | On October 31, 2021, the Bank redeemed all of its 40,000,000 outstanding Non-Cumulative Class A First Preferred Shares, Series 14 (NVCC). |
Prior Sales
In the most recently completed financial year, the Bank did not issue any shares that are not listed or quoted on a marketplace. For information on the Bank’s issuance of subordinated debentures and limited recourse capital notes since October 31, 2020, please see Notes 19 and 20 of the Annual Financial Statements for the year ended October 31, 2021, which notes are incorporated by reference in this AIF.
ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTIONS ON TRANSFER
| Designation of class | Number of securities held in escrow or that are subject to a contractual restriction on transfer as at October 31, 2021 |
Percentage of class | ||
| Common Shares1 | 86,339 |
0.004% | ||
| Class A First Preferred Shares, Series 26 (NVCC)2 | 1,750,000 |
100% of the Class A First Preferred Shares, Series 26 (NVCC) |
1 On November 1, 2018, the Bank acquired 100% of the outstanding equity of Greystone Capital Management Inc. (GCMI), the parent company of Greystone Managed Investments Inc. (Greystone). In connection therewith, TD common shares were issued to employee shareholders to satisfy a portion of the purchase price and to replace share-based awards. A portion of the common shares of each employee shareholder intended to replace share based awards were held in escrow for a period of three years following the acquisition date, subject to the continued employment of such employee shareholder. On November 1, 2021, the remaining 86,339 common shares that were held in escrow as of October 31, 2021 were released from escrow and delivered to the applicable shareholders. AST Trust Company (Canada) acted as Escrow Agent.
2 The Class A First Preferred Shares, Series 26 (NVCC) are held in a limited recourse trust and are restricted from being transferred except to satisfy the recourse of the holders of the Limited Recourse Capital Notes in the event of a Recourse Event.
- 14 -
DIRECTORS AND EXECUTIVE OFFICERS
Directors and Board Committees of the Bank
The following table sets forth, as at December 1, 2021, the directors of the Bank, their present principal occupation and business, municipality of residence and the date each became a director of the Bank.
| Director Name Principal Occupation & Municipality of Residence |
Director Since | |
| Cherie L. Brant |
August 2021 | |
| Amy W. Brinkley |
September 2010 | |
| Brian C. Ferguson |
March 2015 | |
| Colleen A. Goggins |
March 2012 | |
|
Jean-René Halde Corporate Director, and retired President and Chief Executive Officer Business Development Bank of Canada Saint-Laurent, Quebec, Canada |
December 2015 | |
| David E. Kepler The Dow Chemical Company |
December 2013 | |
| Brian M. Levitt Kingston, Ontario, Canada |
December 2008 | |
| Alan N. MacGibbon Deloitte LLP (Canada) |
April 2014 | |
| Karen E. Maidment |
September 2011 | |
- 15 -
| Director Name Principal Occupation & Municipality of Residence |
Director Since | |
| Bharat B. Masrani |
April 2014 | |
| Irene R. Miller |
May 2006 | |
| Nadir H. Mohamed |
April 2008 | |
| Claude Mongeau Corporate Director, and former President and Chief Executive Officer, Canadian National Railway Company Montreal, Quebec, Canada |
March 2015 | |
| Joseph M. Natale Corporate Director, and former President and Chief Executive Officer, Rogers Communications Inc. Toronto, Ontario, Canada |
April 2021 | |
| S. Jane Rowe Vice Chair, Investments, Ontario Teachers’ Pension Plan Board Toronto, Ontario, Canada |
April 2020 | |
Except as disclosed below, all directors have had the same principal occupation for the past five years.
Mr. Ferguson was President & Chief Executive Officer of Cenovus Energy Inc. prior to November 3, 2017. Mr. Natale was President and Chief Executive Officer of Rogers Communications Inc. from April 19, 2017 until November 16, 2021. Ms. Rowe was Executive Managing Director and head of the Equities department of the Ontario Teachers’ Pension Plan Board prior to October 1, 2020.
Each director will hold office until the next annual meeting of shareholders of the Bank, which is scheduled for April 14, 2022. Information concerning the nominees proposed for election as directors at the meeting will be contained in the management proxy circular of the Bank in respect of the meeting.
- 16 -
The following table sets forth the Committees of the Bank’s Board, the members of each Committee as at December 1, 2021 and each Committee’s key responsibilities.
| Committee | Members | Key Responsibilities | ||
| Corporate Governance Committee | Brian M. Levitt (Chair) Amy W. Brinkley Karen E. Maidment Alan N. MacGibbon |
Responsibility for corporate governance of the Bank:
• Identify individuals qualified to become Board members and recommend to the Board the director nominees for the next annual meeting of shareholders and recommend candidates to fill vacancies on the Board that occur between meetings of the shareholders; • Develop and recommend to the Board a set of corporate governance principles, including a code of conduct and ethics, aimed at fostering a healthy governance culture at the Bank; • Satisfy itself that the Bank communicates effectively, both proactively and responsively, with its shareholders, other interested parties and the public; • Oversee the Bank’s alignment with its purpose and its strategy, performance and reporting on corporate responsibility for environmental and social matters; • Provide oversight of enterprise-wide conduct risk and act as the conduct review committee for the Bank and certain of its Canadian subsidiaries that are federally-regulated financial institutions; and • Oversee the evaluation of the Board and Committees. | ||
| Human Resources Committee | Karen E. Maidment (Chair) Amy W. Brinkley David E. Kepler Brian M. Levitt Nadir H. Mohamed |
Responsibility for management’s performance evaluation, compensation and succession planning:
• Discharge, and assist the Board in discharging, the responsibility of the Board relating to leadership, human capital management and compensation, as set out in the Committee’s charter; • Set corporate goals and objectives for the CEO, and regularly measure the CEO’s performance against these goals and objectives; • Recommend compensation for the CEO to the Board for approval, and review and approve compensation for certain senior officers; • Monitor the Bank’s compensation strategy, plans, policies and practices for alignment to the Financial Stability Board Principles for Sound Compensation Practices and Implementation Standards, including the appropriate consideration of risk; • Oversee a robust talent planning and development process, including review and approval of the succession plans for the senior officer positions and heads of control functions; • Review and recommend the CEO succession plan to the Board for approval; • Produce a report on compensation, which is published in the Bank’s annual proxy circular, and review, as | ||
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| Committee | Members | Key Responsibilities | ||
| appropriate, any other related major public disclosures concerning compensation; and • Oversee the strategy, design and management of the Bank’s employee pension, retirement savings and benefit plans. | ||||
| Risk Committee | Amy W. Brinkley (Chair) Cherie L. Brant Colleen A. Goggins David E. Kepler Alan N. MacGibbon Karen E. Maidment |
Supervising the management of risk of the Bank:
• Approve the Enterprise Risk Framework (“ERF”) and related risk category frameworks and policies that establish the appropriate approval levels for decisions and other measures to manage risk to which the Bank is exposed; • Review and recommend the Bank’s Enterprise Risk Appetite Statement for approval by the Board and oversee the Bank’s major risks as set out in the ERF; • Review the Bank’s risk profile and performance against Risk Appetite; and • Provide a forum for “big-picture” analysis of an enterprise view of risk including considering trends, and current and emerging risks. | ||
| Audit Committee | Alan N. MacGibbon* (Chair) Brian C. Ferguson* Jean-René Halde Irene R. Miller* Claude Mongeau* S. Jane Rowe* |
Supervising the quality and integrity of the Bank’s financial reporting and compliance requirements:
• Oversee reliable, accurate and clear financial reporting to shareholders; • Oversee the effectiveness of internal controls, including internal controls over financial reporting; • Directly responsible for the selection, compensation, retention and oversight of the work of the shareholders’ auditor – the shareholders’ auditor reports directly to the Committee; • Receive reports from the shareholders’ auditor, chief financial officer, chief auditor, chief compliance officer, and global chief anti-money laundering officer, and evaluate the effectiveness and independence of each; • Oversee the establishment and maintenance of policies and programs reasonably designed to achieve and maintain the Bank’s compliance with the laws and regulations that apply to it; and • Act as the Audit Committee for certain subsidiaries of the Bank that are federally-regulated financial institutions. | ||
| * | Designated Audit Committee Financial Expert |
- 18 -
Audit Committee
The Audit Committee of the Board of Directors of the Bank operates under a written charter that sets out its responsibilities and composition requirements. A copy of the charter is attached to this AIF as Appendix “C”. The Committee charter requires all members to be financially literate or be willing and able to acquire the necessary knowledge quickly. “Financially literate” means the ability to read and understand financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Bank’s financial statements.
In addition, the Committee charter contains independence requirements applicable to each member and each member currently meets those requirements. Specifically, the charter provides that no member of the Committee may be an officer or retired officer of the Bank and every member shall be independent of the Bank within the meaning of all applicable laws, rules and regulations, including those particularly applicable to Audit Committee members and any other relevant consideration as determined by the Board, including the Bank’s Director Independence Policy (a copy of which is available on the Bank’s website at www.td.com).
As indicated in the table above, the members of the Committee are: Alan N. MacGibbon (Chair), Brian C. Ferguson, Jean-René Halde, Irene R. Miller, Claude Mongeau and S. Jane Rowe. The members of the Audit Committee bring significant skill and experience to their responsibilities, including academic and professional experience in accounting, business and finance. The Board has determined that each of Messrs. Ferguson, MacGibbon and Mongeau and Mses. Miller and Rowe has the attributes of an Audit Committee financial expert as defined in the U.S. Sarbanes-Oxley Act; all Committee members are financially literate and independent under the applicable listing standards of the New York Stock Exchange, the Committee charter, the Bank’s Director Independence Policy and the corporate governance guidelines of the Canadian Securities Administrators.
The following sets out the education and experience of each director relevant to the performance of his or her duties as a member of the Committee:
Brian C. Ferguson is a Corporate Director. He is the former President & Chief Executive Officer of Cenovus Energy Inc. Prior to leading Cenovus Energy Inc., Mr. Ferguson was the Executive Vice-President and Chief Financial Officer of Encana Corporation. Mr. Ferguson holds an undergraduate degree in commerce from the University of Alberta and is a Fellow of Chartered Professional Accountants Alberta. Mr. Ferguson serves as Chair of the Audit Committee of Trans Mountain Corporation. Mr. Ferguson is one of the Bank’s Audit Committee financial experts.
Jean-René Halde is a Corporate Director. He was the President and Chief Executive Officer of the Business Development Bank of Canada from June 2005 to June 2015. Prior to June 2005, Mr. Halde held Chief Executive Officer positions at several leading companies, including Metro-Richelieu Inc., Culinar Inc., and Livingston Group Inc. Mr. Halde holds a master’s degree in Economics from the University of Western Ontario and a master’s degree in business administration from the Harvard Business School.
Alan N. MacGibbon is Chair of the Bank’s Audit Committee. Mr. MacGibbon is a Corporate Director. He was Managing Partner and Chief Executive of Deloitte LLP (Canada) from 2004 to June 2012 and also served as Global Managing Director, Quality, Strategy and Communications of Deloitte Touche Tohmatsu Limited from June 2011 to September 2013 and Senior Counsel to Deloitte LLP (Canada) from June 2012 to December 2013. Mr. MacGibbon currently serves as Chair of the Audit Committee of each of TD Bank US Holding Company (the holding company of TD Bank, N.A. and TD Bank USA, N.A.), and a member of the Audit Committee of CAE, Inc. Mr. MacGibbon holds an undergraduate degree in business administration and an honorary doctorate degree from the University of New Brunswick. He is a Chartered Professional Accountant, a Chartered Accountant, and a Fellow of the Chartered Professional Accountants Ontario. Mr. MacGibbon is one of the Bank’s Audit Committee financial experts.
Irene R. Miller is the Chief Executive Officer of Akim, Inc. Until June 1997, Ms. Miller was Vice Chairman and Chief Financial Officer of Barnes & Noble, Inc. Prior to joining Barnes & Noble, Inc. in 1991, she held
- 19 -
senior investment banking and corporate finance positions with Morgan Stanley & Co. and Rothschild Inc., respectively. Ms. Miller previously served as Chair of the Audit Committee of the boards of Inditex, S.A., Coach, Inc., Oakley, Inc., The Body Shop International plc, and Benckiser N.V. Ms. Miller holds an undergraduate degree in science from the University of Toronto and a master of science degree in chemistry and chemical engineering from Cornell University. Ms. Miller is one of the Bank’s Audit Committee financial experts.
Claude Mongeau is a Corporate Director. He is the former President and Chief Executive Officer of Canadian National Railway Company. Prior to leading Canadian National Railway Company, Mr. Mongeau was the company’s Executive Vice-President and Chief Financial Officer. Mr. Mongeau serves as Chair of the Audit Committee of Cenovus Energy Inc., and is a member of the Safety, Environment, Responsibility and Reserves Committee of Cenovus Energy Inc. and the Finance and Risk Management, Safety, and the Compensation Committees of Norfolk Southern Corporation. Mr. Mongeau holds an undergraduate degree in psychology from the Université du Québec à Montréal and a master’s degree in business administration from McGill University. Mr. Mongeau is one of the Bank’s Audit Committee financial experts.
S. Jane Rowe is the Vice Chair, Investments, Ontario Teachers’ Pension Plan (“Ontario Teachers”) and was formerly the Executive Managing Director, Equities, Ontario Teachers. Prior to joining Ontario Teachers in 2010, Ms. Rowe held several senior investment banking and executive finance positions at Scotiabank. Ms. Rowe previously served as Chair of the Audit Committee of Sierra Wireless. Ms. Rowe holds an undergraduate degree in commerce from the Memorial University of Newfoundland and a master’s degree in business administration from the Schulich School of Business, York University. Ms. Rowe is one of the Bank’s Audit Committee financial experts.
Additional Information Regarding the Audit Committee and Shareholders’ Auditor
The Audit Committee oversees the financial reporting process at the Bank, including the work of the shareholder’s independent external auditor, currently Ernst & Young LLP (“EY”). EY is responsible for planning and carrying out, in accordance with professional standards, an audit of the Bank’s annual financial statements and reviews of the Bank’s quarterly financial statements.
The Audit Committee is responsible for the annual recommendation of the appointment and oversight of the shareholders’ independent external auditor. The Audit Committee assesses the performance and qualification of the shareholders’ auditor and submits its recommendation for appointment, or reappointment, to the Board for recommendation to the shareholders. The shareholders’ auditor is then appointed by the shareholders, who vote on this matter at the Annual General Meeting.
At least annually, the Audit Committee evaluates the performance, qualifications, skills, resources (amount and type), and independence of the shareholders’ auditor, including the lead partner, in order to support the Board in reaching its recommendation to appoint the shareholders’ auditor. This annual evaluation includes an assessment of audit quality and service considerations such as: auditor independence, objectivity and professional skepticism; quality of the engagement team; monitoring of the partner rotation timing; and quality of the communication and service provided by the shareholders’ auditor. In the evaluation, the Audit Committee considers the nature and extent of communications received from the shareholders’ auditor during the year, the responses from management and the Audit Committee to an annual questionnaire regarding the performance of, and interactions with, the shareholders’ auditor.
EY was appointed as the shareholders’ independent external auditor for the year ended October 31, 2021, in accordance with the Bank Act and the recommendation by the Audit Committee and has been the Bank’s sole independent external auditor beginning with the year ended October 31, 2006. Prior to 2006, EY acted as joint auditors of the Bank.
- 20 -
Executive Officers of the Bank
As at December 1, 2021, the following individuals are executive officers of the Bank:
| Executive Officer | Principal Occupation | Municipality of Residence | ||
| Riaz Ahmed |
Group Head, Wholesale Banking, TD Bank Group and President and CEO, TD Securities | Oakville, Ontario, Canada | ||
|
Ajai K. Bambawale |
Group Head and Chief Risk Officer, TD Bank Group | Toronto, Ontario, Canada | ||
| Greg Braca1 |
Group Head, U.S. Retail, TD Bank Group and President and Chief Executive Officer, TD Bank, America’s Most Convenient Bank® | Orangeburg, New York, U.S.A. | ||
| Norie C. Campbell |
Group Head and General Counsel, TD Bank Group | Toronto, Ontario, Canada | ||
| Theresa L. Currie1 |
Group Head, Canadian Personal Banking, TD Bank Group | Toronto, Ontario, Canada | ||
| Paul C. Douglas |
Group Head, Canadian Business Banking, TD Bank Group | Burlington, Ontario, Canada | ||
| Barbara Hooper |
Senior Executive Vice President, Treasury, Corporate Development, Strategic Sourcing and Real Estate | Etobicoke, Ontario, Canada | ||
| Kenn Lalonde |
Senior Executive Vice President and Chief Human Resources Officer, TD Bank Group | Toronto, Ontario, Canada | ||
| Bharat B. Masrani |
Group President and Chief Executive Officer, TD Bank Group | Toronto, Ontario, Canada | ||
| Christine Morris |
Senior Executive Vice President, Enterprise Transformation, Enablement and Customer Experience | Etobicoke, Ontario, Canada | ||
| Michael G. Rhodes1 |
Group Head, Innovation, Technology and Shared Services, TD Bank Group | Wilmington, Delaware, U.S.A. | ||
| Leovigildo Salom1 |
Group Head, Wealth Management and TD Insurance, TD Bank Group | Toronto, Ontario, Canada | ||
| Kelvin Tran |
Senior Executive Vice President and Chief Financial Officer | Toronto, Ontario, Canada |
| 1. | On October 28, 2021, the Bank announced the following changes to its executive officers, effective January 1, 2022: Michael Rhodes will become Group Head, Canadian Personal Banking, succeeding Theresa Currie who will retire on January 31, 2022; Leo Salom will become Group Head U.S. Retail, TD Bank Group & President and CEO, TD Bank, America’s Most Convenient Bank®, succeeding Greg Braca who will become Vice-Chair of TD Bank in the U.S.; Raymond Chun will become Group Head, Wealth and Insurance, succeeding Leo Salom; and Greg Keeley will become Senior Executive Vice President, Technology and Platforms. |
Except as disclosed below, all executive officers have had the same principal occupation for the past five years.
Prior to commencing his current role as Group Head, Wholesale Banking, TD Bank Group and President and CEO, TD Securities on September 1, 2021, Mr. Ahmed was Group Head and Chief Financial Officer, TD Bank Group from January 2, 2016 until August 31, 2021.
- 21 -
Prior to commencing his current role as Group Head and Chief Risk Officer, TD Bank Group on February 1, 2018, Mr. Bambawale was Executive Vice President, TD Bank Group, and Chief Risk Officer, TD Bank, America’s Most Convenient Bank® from September 18, 2014 to January 31, 2018.
Prior to commencing his current role as Group Head, U.S. Retail, TD Bank Group and President and Chief Executive Officer, TD Bank, America’s Most Convenient Bank® on November 1, 2017, Mr. Braca was Executive Vice President, TD Bank Group and President and Chief Executive Officer, TD Bank, America’s Most Convenient Bank® from June 1, 2017 to October 31, 2017, and Executive Vice President, TD Bank Group and Chief Operating Officer, TD Bank, America’s Most Convenient Bank® from November 1, 2016 to May 31, 2017.
Prior to commencing her current role as Group Head and General Counsel, TD Bank Group on March 20, 2020, Ms. Campbell was Group Head, Customer and Colleague Experience, TD Bank Group from November 1, 2017 to March 19, 2020, Group Head and Chief General Counsel, TD Bank Group from December 12, 2016 to October 31, 2017, and Group Head and General Counsel (formerly known as Group Head Legal, Compliance, Anti-Money Laundering, Financial Crimes and Fraud Management, Enterprise Projects and General Counsel, TD Bank Group) from November 1, 2014 to December 11, 2016.
Prior to commencing her current role as Senior Executive Vice President, Treasury, Corporate Development, Strategic Sourcing and Real Estate on September 1, 2021, Ms. Hooper was Executive Vice President, Treasury, Corporate Development and Strategic Sourcing from January 23, 2017 to August 31, 2021, and Senior Vice President, Treasury and Balance Sheet Management and Corporate Development from June 27, 2016 to January 22, 2017.
Prior to commencing his current role as Senior Executive Vice President and Chief Human Resources Officer on May 27, 2021, Mr. Lalonde was Executive Vice President, Human Resources from May 27, 2019 to May 26, 2021, and President and CEO of TD Insurance from September 17, 2012 to May 26, 2019.
Prior to starting her current role as Senior Executive Vice President, Enterprise Transformation, Enablement and Customer Experience on September 1, 2021, Ms. Morris was Executive Vice President and Chief Operating Officer, Canadian Personal Banking from April 1, 2020 to August 31, 2021, Executive Vice President, Lending Solutions, Canadian Personal Banking from September 16, 2019 to March 31, 2020, and Senior Vice President, Real Estate Secured Lending, Personal Banking Products, Canadian Personal Banking from June 27, 2016 to September 15, 2019.
Prior to commencing his current role as Group Head, Innovation, Technology and Shared Services, TD Bank Group on November 1, 2017, Mr. Rhodes was Executive Vice President, TD Bank Group and Head of Consumer Banking, TD Bank, America’s Most Convenient Bank® from July 6, 2015 to October 31, 2017.
Prior to commencing his current role as Group Head, Wealth Management and TD Insurance, TD Bank Group on November 1, 2017, Mr. Salom was Executive Vice President, Wealth Management, TD Bank Group from August 2, 2011 to October 31, 2017.
Prior to commencing his current role as Senior Executive Vice President and Chief Financial Officer on September 1, 2021, Mr. Tran was Executive Vice President, Enterprise Finance from March 29, 2021 until August 31, 2021, Senior Vice President, TD Bank Group and Chief Financial Officer, TD Bank, America’s Most Convenient Bank® from July 28, 2020 to March 28, 2021, and Senior Vice President and Chief Auditor from November 29, 2017 to July 27, 2020.
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Shareholdings of Directors and Executive Officers
To the knowledge of the Bank, as at October 31, 2021, the directors and executive officers of the Bank as a group beneficially owned, directly or indirectly, or exercised control or direction over an aggregate of 1,659,900 of the Bank’s common shares, representing approximately 0.09% of the Bank’s issued and outstanding common shares on that date.
Additional Disclosure for Directors and Executive Officers
To the best of our knowledge, having made due inquiry, the Bank confirms that, as at December 1, 2021, except as set out below:
| (i) | no director or executive officer of the Bank is, or was within the last ten years, a director or officer of a company (including the Bank) that: |
| (a) | was subject to an order (including a cease trade order or an order similar to a cease trade or an order that denied the relevant company access to any exemption under securities legislation for a period of more than 30 consecutive days), that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; |
| (b) | was subject to an order that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer; or |
| (c) | within a year of the person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets. |
| (ii) | in the last ten years, no director or executive officer of the Bank has become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director or executive officer; and |
| (iii) | no director or executive officer of the Bank has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority or has been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision. |
Ms. Goggins was, prior to June 14, 2016, a director of Valeant Pharmaceuticals International, Inc. (“Valeant”). Management cease trade orders were issued for directors and officers of Valeant by the Autorité des marchés financiers (Quebec) while Ms. Goggins was a director of Valeant. These orders were effective from March 31, 2016 to April 29, 2016, and from May 17, 2016 to June 8, 2016.
Pre-Approval Policies and Shareholders’ Auditor Service Fees
The Bank’s Audit Committee has implemented a policy restricting the services that may be performed by the shareholders’ independent external auditor. The policy provides detailed guidance to management as to the specific services that are eligible for Audit Committee pre-approval. By law, the shareholders’ auditor may not provide certain services to the Bank or its subsidiaries.
The types of services to be performed by the shareholders’ auditor, together with the maximum amount of fees that may be paid for such services, must be annually pre-approved by the Audit Committee pursuant to the policy. The policy also provides that the Audit Committee will, on a quarterly basis, receive a year-
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to-date report of fees paid or payable to the shareholders’ auditor for services performed, as well as details of any proposed engagements for consideration and, if necessary pre-approval, by the Audit Committee. In making its determination regarding the services to be performed by the shareholders’ auditor, the Audit Committee considers compliance with applicable legal and regulatory requirements and guidance, and with the policy, as well as whether the provision of the services could negatively impact auditor independence. This includes considering whether the provision of the services would place the auditor in a position to audit its own work, place the auditor in an advocacy role on behalf of the Bank, or result in the auditor acting in the role of the Bank’s management.
Fees paid to EY, the Bank’s current shareholders’ independent external auditor, by category of fee for services provided during the three most recently completed fiscal years are detailed in the table below.
| Fees paid to Ernst & Young LLP | ||||||||||||
| (thousands of Canadian dollars) |
2021 | 2020 | 2019 | |||||||||
| Audit fees1 |
$ | 28,530 | $ | 28,283 | $ | 26,395 | ||||||
| Audit-related fees2 |
1,502 | 1,334 | 1,477 | |||||||||
| Tax fees3 |
913 | 1,481 | 1,794 | |||||||||
| All other fees4 |
1,103 | 1,680 | 512 | |||||||||
| Total Bank and Subsidiaries |
$ | 32,048 | $ | 32,778 | $ | 30,178 | ||||||
| Investment Funds5 |
3,060 | 2,970 | 231 | |||||||||
| Total Fees |
$ | 35,108 | $ | 35,748 | $ | 30,409 | ||||||
Notes:
| 1. | Audit fees are fees for the professional services in connection with the audit of the Bank’s financial statements including the audit of internal control over financial reporting, the audit of its subsidiaries, and other services that are normally provided by the shareholders’ auditor in connection with statutory and regulatory filings or engagements. |
| 2. | Audit-related fees are fees for assurance and related services that are performed by the shareholders’ auditor. These services include: employee benefit plan audits; audit of charitable organizations; audit services for certain special purpose entities administered by the Bank; accounting and tax consultation in connection with mergers, acquisitions, divestitures and restructurings; application and general controls reviews; interpretation of accounting,; assurance services or specified procedures that are not required by statute or regulation; translation of financial statements and reports in connection with the audit or review; and information technology advisory services. |
| 3. | Tax fees comprise general tax planning and advice related to mergers and acquisitions and financing structures; electronic and paper-based tax knowledge publications; income and commodity tax compliance and advisory services; and transfer pricing services and customs and duties issues. |
| 4. | All other fees include fees for reports on control procedures at a service organization; audit and tax services for SEC-registered funds, subject to the SEC investment company complexes rules as well as other funds and related management entities; benchmark studies; regulatory advisory services; and performance and process improvement services. |
| 5. | Includes fees for professional services provided by EY for certain investment funds managed by subsidiaries of the Bank. In addition to other administrative costs, the subsidiaries are responsible for the auditors’ fees for professional services rendered in connections with the annual audit, statutory and regulatory filings, and other services for the investment funds, in return for a fixed administration fee. For certain funds, these fees are paid directly by the funds. EY was appointed auditor of the majority of the investment funds for the fiscal year ended October 31, 2020. |
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LEGAL PROCEEDINGS AND REGULATORY ACTIONS
Legal Proceedings
A description of certain legal proceedings to which the Bank is a party is set out under the heading “Litigation” in Note 27 of the Annual Financial Statements for the year ended October 31, 2021, which note is incorporated by reference in this AIF.
Regulatory Actions
From time to time, in the ordinary course of business, the Bank and its subsidiaries are assessed fees or fines by securities regulatory authorities in relation to administrative matters, including late filings or reporting, which may be considered penalties or sanctions pursuant to Canadian securities regulations, but which are not, individually or in the aggregate, material to the Bank.1 In addition, the Bank and its subsidiaries are subject to numerous regulatory authorities around the world, and fees, administrative penalties, settlement agreements and sanctions may be categorized differently by each regulator. During the past financial year, the Bank paid a $400,000 administrative monetary penalty to the Financial Consumer Agency of Canada.
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
To the best of our knowledge, the Bank confirms that, as at December 1, 2021, there were no directors or executive officers of the Bank, nor any associate or affiliate of a director or executive officer of the Bank, with a material interest in any transaction within the three most recently completed financial years or during the current financial year that has materially affected or is reasonably expected to materially affect the Bank.
TRANSFER AGENTS AND REGISTRARS
Transfer Agent
TSX Trust Company
P.O. Box 700, Station B
Montreal, Quebec H3B 3K3
Telephone: 416-682-3860 or toll-free at 1-800-387-0825 (Canada and U.S. only)
Fax: 1-888-249-6189
Email: inquiries@astfinancial.com
Website: www.astfinancial.com/ca-en
Co-transfer Agent and Registrar
Computershare
P.O. Box 505000
Louisville, KY 40233
or
462 South 4th Street, Suite 1600
Louisville, KY 40202
Telephone: 1-866-233-4836
TDD for hearing impaired: 1-800-231-5469
Shareholders outside of U.S.: 201-680-6578
TDD shareholders outside of U.S.: 201-680-6610
Website: www.computershare.com/investor
| 1 | National Instrument 14-101 Definitions limits the meaning of “securities legislation” to Canadian provincial and territorial legislation and “securities regulatory authority” to Canadian provincial and territorial securities regulatory authorities. |
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INTERESTS OF EXPERTS
The Consolidated Financial Statements of the Bank for the year ended October 31, 2021 filed under National Instrument 51-102 – Continuous Disclosure Obligations, portions of which are incorporated by reference in this AIF, have been audited by EY, Chartered Professional Accountants, Licensed Public Accountants, Toronto, Ontario. EY is the external auditor who prepared the Report of Independent Registered Public Accounting Firm – Opinion on the Consolidated Financial Statements, and Report of Independent Registered Public Accounting Firm – Opinion on Internal Control over Financial Reporting. EY is independent with respect to the Bank within the context of the CPA Code of Professional Conduct of the Chartered Professional Accountants of Ontario. EY is also independent with respect to the Bank within the meaning of the U.S. federal securities laws and the applicable rules and regulations thereunder adopted by the U.S. Securities and Exchange Commission and the Public Company Accounting Oversight Board.
ADDITIONAL INFORMATION
Additional information concerning the Bank may be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Bank’s securities and options to purchase securities, in each case if applicable, is contained in the Bank’s management proxy circular for its most recent annual meeting of shareholders that involved the election of directors. Additional financial information is provided in the Bank’s comparative financial statements and management’s discussion and analysis for its most recently completed financial year, which at the date hereof was the year ended October 31, 2021.
Under certain Canadian bank resolution powers that came into effect on September 23, 2018 (the “bail-in regime”), the Canada Deposit Insurance Corporation (“CDIC”) may, in circumstances where the Bank has ceased, or is about to cease, to be viable, assume temporary control or ownership of the Bank and may be granted broad powers by one or more orders of the Governor in Council (Canada), including the power to sell or dispose of all or a part of the assets of the Bank, and the power to carry out or cause the Bank to carry out a transaction or a series of transactions the purpose of which is to restructure the business of the Bank. The expressed objectives of the bail-in regime include reducing government and taxpayer exposure in the unlikely event of a failure of a bank designated by OSFI as a domestic systemically important bank (“D-SIB”), reducing the likelihood of such a failure by increasing market discipline and reinforcing that bank shareholders and creditors are responsible for the D-SIBs’ risks and not taxpayers, and preserving financial stability by empowering the CDIC to quickly restore a failed D-SIB to viability and allow it to remain open and operating, even where the D-SIB has experienced severe losses. For a description of Canadian bank resolution powers and the consequent risk factors attaching to certain liabilities of the Bank, reference is made to https://www.td.com/investor-relations/ir-homepage/regulatory-disclosures/main-features-of-capital-instruments/main-features-of-capital-instruments.jsp.
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Appendix “A”
Intercorporate Relationships
The following is a list of the directly or indirectly held significant subsidiaries.
| SIGNIFICANT SUBSIDIARIES1 | ||||||
| (millions of Canadian dollars) | October 31, 2021 | |||||
| North America | Address of Head or Principal Office2 |
Carrying value of shares owned by the Bank3 |
||||
| Meloche Monnex Inc. |
Montreal, Québec | $ | 2,354 | |||
| Security National Insurance Company |
Montreal, Québec | |||||
| Primmum Insurance Company |
Toronto, Ontario | |||||
| TD Direct Insurance Inc. |
Toronto, Ontario | |||||
| TD General Insurance Company |
Toronto, Ontario | |||||
| TD Home and Auto Insurance Company |
Toronto, Ontario | |||||
| TD Wealth Holdings Canada Limited |
Toronto, Ontario | 5,085 | ||||
| TD Asset Management Inc. |
Toronto, Ontario | |||||
| GMI Servicing Inc. |
Regina, Saskatchewan | |||||
| TD Waterhouse Private Investment Counsel Inc. |
Toronto, Ontario | |||||
| TD Waterhouse Canada Inc. |
Toronto, Ontario | |||||
| TD Auto Finance (Canada) Inc. |
Toronto, Ontario | 3,321 | ||||
| TD Group US Holdings LLC |
Wilmington, Delaware | 68,575 | ||||
| Toronto Dominion Holdings (U.S.A.), Inc. |
New York, New York | |||||
| TD Prime Services LLC |
New York, New York | |||||
| TD Securities Automated Trading LLC |
Chicago, Illinois | |||||
| TD Securities (USA) LLC |
New York, New York | |||||
| Toronto Dominion (Texas) LLC |
New York, New York | |||||
| Toronto Dominion (New York) LLC |
New York, New York | |||||
| Toronto Dominion Capital (U.S.A.), Inc. |
New York, New York | |||||
| Toronto Dominion Investments, Inc. |
New York, New York | |||||
| TD Bank US Holding Company |
Cherry Hill, New Jersey | |||||
| Epoch Investment Partners, Inc. |
New York, New York | |||||
| TDAM USA Inc. |
New York, New York | |||||
| TD Bank USA, National Association |
Cherry Hill, New Jersey | |||||
| TD Bank, National Association |
Cherry Hill, New Jersey | |||||
| TD Auto Finance LLC |
Farmington Hills, Michigan | |||||
| TD Equipment Finance, Inc. |
Cherry Hill, New Jersey | |||||
| TD Private Client Wealth LLC |
New York, New York | |||||
| TD Wealth Management Services Inc. |
Mt. Laurel, New Jersey | |||||
| TD Investment Services Inc. |
Toronto, Ontario | 38 | ||||
| TD Life Insurance Company |
Toronto, Ontario | 93 | ||||
| TD Mortgage Corporation |
Toronto, Ontario | 11,041 | ||||
| TD Pacific Mortgage Corporation |
Vancouver, British Columbia | |||||
| The Canada Trust Company |
Toronto, Ontario | |||||
| TD Securities Inc. |
Toronto, Ontario | 2,656 | ||||
| TD Vermillion Holdings Limited |
Toronto, Ontario | 27,487 | ||||
| TD Financial International Ltd. |
Hamilton, Bermuda | |||||
| TD Reinsurance (Barbados) Inc. |
St. James, Barbados | |||||
| International | ||||||
| TD Ireland Unlimited Company |
Dublin, Ireland | 1,322 | ||||
| TD Global Finance Unlimited Company |
Dublin, Ireland | |||||
| TD Securities (Japan) Co. Ltd. |
Tokyo, Japan | 12 | ||||
| Toronto Dominion Australia Limited |
Sydney, Australia | 100 | ||||
| Toronto Dominion Investments B.V. |
London, England | 1,022 | ||||
| TD Bank Europe Limited |
London, England | |||||
| Toronto Dominion Holdings (U.K.) Limited |
London, England | |||||
| TD Securities Limited |
London, England | |||||
| Toronto Dominion (South East Asia) Limited |
Singapore, Singapore | 1,054 | ||||
| 1 | Unless otherwise noted, The Toronto-Dominion Bank, either directly or through its subsidiaries, owns 100% of the entity and/or 100% of any issued and outstanding voting securities and non-voting securities of the entities listed. |
| 2 | Each subsidiary is incorporated or organized in the country in which its head or principal office is located, with the exception of Toronto Dominion Investments B.V., a company incorporated in The Netherlands, but with its principal office in the United Kingdom. |
| 3 | Carrying amounts are prepared for purposes of meeting the disclosure requirements of Section 308 (3)(a)(ii) of the Bank Act. Intercompany transactions may be included herein which are eliminated for consolidated financial reporting purposes. |
Appendix “B”
Description of Ratings
Description of ratings, as disclosed by Moody’s Investors Service on its public website
Ratings assigned on Moody’s global long-term and short-term rating scales are forward-looking opinions of the relative credit risks of financial obligations issued by non-financial corporates, financial institutions, structured finance vehicles, project finance vehicles, and public sector entities. Moody’s defines credit risk as the risk that an entity may not meet its contractual financial obligations as they come due and any estimated financial loss in the event of default or impairment. The contractual financial obligations addressed by Moody’s ratings are those that call for, without regard to enforceability, the payment of an ascertainable amount, which may vary based upon standard sources of variation (e.g., floating interest rates), by an ascertainable date. Moody’s rating addresses the issuer’s ability to obtain cash sufficient to service the obligation, and its willingness to pay. Moody’s ratings do not address non- standard sources of variation in the amount of the principal obligation (e.g., equity indexed), absent an express statement to the contrary in a press release accompanying an initial rating. Long-term ratings are assigned to issuers or obligations with an original maturity of eleven months or more and reflect both on the likelihood of a default or impairment on contractual financial obligations and the expected financial loss suffered in the event of default or impairment. Short-term ratings are assigned to obligations with an original maturity of thirteen months or less and reflect both on the likelihood of a default or impairment on contractual financial obligations and the expected financial loss suffered in the event of default or impairment. Moody’s issues ratings at the issuer level and instrument level on both the long- term scale and the short-term scale. Typically, ratings are made publicly available although private and unpublished ratings may also be assigned.
Moody’s differentiates structured finance ratings from fundamental ratings (i.e., ratings on nonfinancial corporate, financial institution, and public sector entities) on the global long-term scale by adding (sf) to all structured finance ratings. The addition of (sf) to structured finance ratings should eliminate any presumption that such ratings and fundamental ratings at the same letter grade level will behave the same. The (sf) indicator for structured finance security ratings indicates that otherwise similarly rated structured finance and fundamental securities may have different risk characteristics. Through its current methodologies, however, Moody’s aspires to achieve broad expected equivalence in structured finance and fundamental rating performance when measured over a long period of time.
Moody’s assigns ratings to long-term and short-term financial obligations. Long-term ratings are assigned to issuers or obligations with an original maturity of eleven months or more and reflect both on the likelihood of a default on contractually promised payments and the expected financial loss suffered in the event of default. Short-term ratings are assigned to obligations with an original maturity of thirteen months or less and reflect both on the likelihood of a default on contractually promised payments and the expected financial loss suffered in the event of default. Moody’s appends numerical modifiers 1, 2, and 3 to each generic rating classification from ‘Aa’ through ‘Caa’. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. Additionally, a ‘(hyb)’ indicator is appended to all ratings of hybrid securities issued by banks, insurers, finance companies, and securities firms.
A global long-term rating of ‘Aa’ reflects obligations that are judged to be of high quality and are subject to very low credit risk. Obligations rated ‘A’ are judged to be upper-medium grade and are subject to low credit risk. Obligations rated ‘Baa’ are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics. Global short-term ratings of ‘P-1’ (Prime-1) reflect a superior ability to repay short-term obligations.
A Moody’s rating outlook is an opinion regarding the likely rating direction over the medium term. Rating outlooks fall into four categories: ‘Positive’ (POS), ‘Negative’ (NEG), ‘Stable’ (STA), and ‘Developing’
(DEV). Outlooks may be assigned at the issuer level or at the rating level. Where there is an outlook at the issuer level and the issuer has multiple ratings with differing outlooks, an “(m)” modifier to indicate multiple will be displayed and Moody’s press releases will describe and provide the rationale for these differences. A designation of ‘RUR’ (Rating(s) Under Review) is typically used when an issuer has one or more ratings under review, which overrides the outlook designation. A designation of ‘RWR’ (Rating(s) Withdrawn) indicates that an issuer has no active ratings to which an outlook is applicable. Rating outlooks are not assigned to all rated entities. In some cases, this will be indicated by the display ‘NOO’ (No Outlook).
A ‘Stable’ outlook indicates a low likelihood of a rating change over the medium term. A ‘Negative’, ‘Positive’ or ‘Developing’ outlook indicates a higher likelihood of a rating change over the medium term. A rating committee that assigns an outlook of ‘Stable’, ‘Negative’, ‘Positive’, or ‘Developing’ to an issuer’s rating is also indicating its belief that the issuer’s credit profile is consistent with the relevant rating level at that point in time.
Description of ratings, as disclosed by S&P Global Ratings on its public website
An S&P Global Ratings issue credit rating is a forward-looking opinion about the creditworthiness of an obligor with respect to a specific financial obligation, a specific class of financial obligations, or a specific financial program (including ratings on medium-term note programs and commercial paper programs). It takes into consideration the creditworthiness of guarantors, insurers, or other forms of credit enhancement on the obligation and takes into account the currency in which the obligation is denominated. The opinion reflects S&P Global Ratings’ view of the obligor’s capacity and willingness to meet its financial commitments as they come due, and this opinion may assess terms, such as collateral security and subordination, which could affect ultimate payment in the event of default.
Issue credit ratings can be either long-term or short-term. Short-term issue credit ratings are generally assigned to those obligations considered short-term in the relevant market, typically with an original maturity of no more than 365 days. Short-term issue credit ratings are also used to indicate the creditworthiness of an obligor with respect to put features on long-term obligations. We would typically assign a long-term issue credit rating to an obligation with an original maturity of greater than 365 days. However, the ratings we assign to certain instruments may diverge from these guidelines based on market practices. Medium-term notes are assigned long-term ratings.
Issue credit ratings are based, in varying degrees, on S&P Global Ratings’ analysis of the following considerations:
| • | The likelihood of payment—the capacity and willingness of the obligor to meet its financial commitments on an obligation in accordance with the terms of the obligation; |
| • | The nature and provisions of the financial obligation, and the promise we impute; and |
| • | The protection afforded by, and relative position of, the financial obligation in the event of a bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors’ rights. |
An issue rating is an assessment of default risk but may incorporate an assessment of relative seniority or ultimate recovery in the event of default. Junior obligations are typically rated lower than senior obligations, to reflect lower priority in bankruptcy, as noted above. (Such differentiation may apply when an entity has both senior and subordinated obligations, secured and unsecured obligations, or operating company and holding company obligations.)
A long-term obligation rated ‘AA’ differs from the highest-rated obligations only to a small degree. The obligor’s capacity to meet its financial commitments on the obligation is very strong. A long-term obligation rated ‘A’ is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor’s capacity to meet its financial commitments on the obligation is still strong. A long-term obligation rated ‘BBB’ exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to weaken the obligor’s capacity to meet its financial commitments on the obligation. The
ratings from ‘AA’ to ‘CCC’ may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.
A short-term obligation rated ‘A-1’ is rated in the highest category by S&P Global Ratings. The obligor’s capacity to meet its financial commitments on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor’s capacity to meet its financial commitments on these obligations is extremely strong.
The S&P Global Ratings Canadian preferred share rating scale serves issuers, investors, and intermediaries in the Canadian financial markets by expressing preferred share ratings (determined in accordance with global rating criteria) in terms of rating symbols that have been actively used in the Canadian market over a number of years. An S&P Global Ratings preferred share rating on the Canadian scale is a forward-looking opinion about the creditworthiness of an obligor with respect to a specific preferred share obligation issued in the Canadian market relative to preferred shares issued by other issuers in the Canadian market. There is a direct correspondence between the specific ratings assigned on the Canadian preferred share scale and the various rating levels on the global debt rating scale of S&P Global Ratings. The Canadian scale rating is fully determined by the applicable global scale rating, and there are no additional analytical criteria associated with the determination of ratings on the Canadian scale. S&P Global Ratings’ practice is to present ratings on an issuer’s preferred shares on both the global rating scale and on the Canadian national scale when listing the ratings for a particular issuer. A Canadian National preferred share rating of ‘P-2’ corresponds to global scale preferred share rating of ‘BBB’.
An S&P Global Ratings outlook assesses the potential direction of a long-term credit rating over the intermediate term, which is generally up to two years for investment grade and generally up to one year for speculative grade. In determining a rating outlook, consideration is given to any changes in economic and/or fundamental business conditions. A ‘Stable’ rating outlook indicates that a rating is not likely to change.
Description of ratings, as disclosed by DBRS on its public website
The DBRS Morningstar long-term rating scale provides an opinion on the risk of default. That is, the risk that an issuer will fail to satisfy its financial obligations in accordance with the terms under which an obligation has been issued. Ratings are based on quantitative and qualitative considerations relevant to the issuer, and the relative ranking of claims. All rating categories other than ‘AAA’ and ‘D’ also contain subcategories ‘(high)’ and ‘(low)’. The absence of either a ‘(high)’ or ‘(low)’ designation indicates the rating is in the middle of the category. A long-term rating of ‘AA’ is of superior credit quality. The capacity for the payment of financial obligations is considered high. Credit quality differs from ‘AAA’ only to a small degree. Unlikely to be significantly vulnerable to future events. A long-term rating of ‘A’ is of good credit quality. The capacity for the payment of financial obligations is substantial, but of lesser credit quality than ‘AA’. May be vulnerable to future events, but qualifying negative factors are considered manageable.
The DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner. Ratings are based on quantitative and qualitative considerations relevant to the issuer and the relative ranking of claims. The ‘R-1’ and ‘R-2’ rating categories are further denoted by the subcategories ‘(high)’, ‘(middle)’, and ‘(low)’. A short-term debt rating of ‘R-1’ ‘(high)’ is the highest credit quality. The capacity for the payment of short-term financial obligations as they fall due is exceptionally high. Unlikely to be adversely affected by future events.
The DBRS preferred share rating scale reflects an opinion on the risk that an issuer will not fulfil its obligations with respect to both dividend and principal commitments in respect of preferred shares issued in the Canadian securities market in accordance with the terms under which the relevant preferred shares have been issued. Every DBRS rating using the preferred share rating scale is based on quantitative and qualitative considerations relevant to the issuing entity. Each rating category may be denoted by the subcategories ‘high’ and ‘low’. The absence of either a ‘high’ or ‘low’ designation indicates the rating is in the middle of the category. Preferred shares issued in the Canadian securities markets are rated using the preferred share rating scale and preferred shares issued outside of the Canadian securities markets
are rated using the long-term obligations scale. Because preferred share dividends are only payable when approved, the non-payment of a preferred share dividend does not necessarily result in a ‘D’. DBRS may also use ‘SD’ (Selective Default) in cases where only some securities are affected, such as in the case of a “distressed exchange”. Preferred shares rated ‘Pfd-2’ are generally of good credit quality. Protection of dividends and principal is still substantial, but earnings, the balance sheet and coverage ratios are not as strong as ‘Pfd-1’ rated companies. Generally, ‘Pfd-2’ ratings correspond with issuers with an ‘A’ category or higher reference point.
Appendix “C”
AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF THE TORONTO-DOMINION BANK
CHARTER
~ ~ Supervising the Quality and Integrity of the Bank’s Financial Reporting
and Compliance Requirements ~ ~
Main Responsibilities:
| ● | overseeing reliable, accurate and clear financial reporting to shareholders |
| ● | overseeing the effectiveness of internal controls, including internal control over financial reporting |
| ● | directly responsible for the selection, compensation, retention, and oversight of the work of the shareholders’ auditor – the shareholders’ auditor reports directly to the Committee |
| ● | receiving reports from the shareholders’ auditor, chief financial officer, chief auditor, chief compliance officer, and global chief anti-money laundering officer, and evaluating the effectiveness and independence of each |
| ● | overseeing the establishment and maintenance of policies and programs reasonably designed to achieve and maintain the Bank’s compliance with the laws and regulations that apply to it |
| ● | acting as the audit committee for certain subsidiaries of the Bank that are federally-regulated financial institutions |
Independence is Key:
| ● | the Committee is composed entirely of independent directors |
| ● | the Committee meets regularly without management present |
| ● | the Committee has the authority to engage independent advisors, paid for by the Bank, to help it make the best possible decisions on the financial reporting, accounting policies and practices, disclosure practices, compliance, and internal controls of the Bank |
Composition and Independence, Financial Literacy and Authority
The Committee shall be composed of members of the Board of Directors in such number as is determined by the Board with regard to the by-laws of the Bank, applicable laws, rules and regulations, and any other relevant considerations, subject to a minimum requirement of three directors.
In this Charter, “Bank” means The Toronto-Dominion Bank on a consolidated basis. No member of the Committee may be an officer or retired officer of the Bank. Every member of the Committee shall be independent of the Bank within the meaning of all applicable laws, rules and regulations including those particularly applicable to audit committee members and any other relevant consideration as determined by the Board of Directors, including the Bank’s Director Independence Policy. No member of the Committee may serve on more than three public company audit committees without the consent of the Corporate Governance Committee and the Board.
The members of the Committee shall be appointed by the Board and each shall serve until his or her successor is duly appointed, unless the member resigns, is removed, or ceases to be a director. A Chair
will be appointed by the Board upon recommendation of the Corporate Governance Committee, failing which the members of the Committee may designate a Chair by majority vote. The Committee may from time to time delegate to its Chair certain powers or responsibilities that the Committee itself may have hereunder.
In addition to the qualities set out in the Position Description for Directors, all members of the Committee should be financially literate or be willing and able to acquire the necessary knowledge quickly. Financially literate means the ability to read and understand financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Bank’s financial statements. At least one member of the Committee shall have a background in accounting or related financial management experience which would include any experience or background that results in the individual’s financial sophistication, including being or having been an auditor, a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities. In fulfilling the responsibilities set out in this Charter, the Committee has the authority to conduct any investigation it deems appropriate to, and access any officer, employee or agent of the Bank for the purpose of fulfilling its responsibilities, including the shareholders’ auditor. The Committee may obtain advice and assistance from outside legal, accounting or other advisors as the Committee deems necessary to carry out its duties and may retain and determine the compensation to be paid by the Bank for such independent counsel or outside advisor in its sole discretion without seeking Board approval.
Committee members will enhance their familiarity with financial, accounting and other areas relevant to their responsibilities by participating in educational sessions or other opportunities for development.
Meetings
The Committee shall meet at least four times annually, or more frequently as circumstances dictate. The Committee shall meet with the shareholders’ auditor and management quarterly to review the Bank’s financial statements consistent with the section entitled “Financial Reporting” below. The Committee shall dedicate a portion of each of its regularly scheduled quarterly meetings to meeting separately with each of the Chief Executive Officer, the Chief Financial Officer, the General Counsel, the Chief Auditor, the Chief Compliance Officer, the Global Chief Anti-Money Laundering Officer, and the shareholders’ auditor and to meeting on its own without members of management or the shareholders’ auditor. Any member of the Committee may make a request to the Chair for a Committee meeting or any part thereof to be held without management present. The Committee shall also meet with the Office of the Superintendent of Financial Institutions Canada (“OSFI”) to review and discuss the results of OSFI’s annual supervisory examination of the Bank in the event OSFI directs that it meets with the Committee instead of the full Board.
To facilitate open communication between this Committee and the Risk Committee, and where the Chair of the Risk Committee is not a member of this Committee, he or she shall have a standing invitation to attend each meeting of this Committee at his or her discretion as a non-voting observer and receive the materials for each such meeting. In addition, this Committee shall meet with the Risk Committee at least two times annually to discuss topics relevant to both Committees.
The Committee may invite to its meetings any director, member of management of the Bank or such other persons as it deems appropriate in order to carry out its responsibilities. The Committee may also exclude from its meetings any persons it deems appropriate in order to carry out its responsibilities.
Specific Duties and Responsibilities
Financial Reporting
The Committee shall be responsible for the oversight of reliable, accurate and clear financial reporting to shareholders, including reviewing and discussing the Bank’s annual and interim financial statements and management’s discussion and analysis (“MD&A”) and reviewing the shareholders’ auditor opinion on the
annual financial statements and on the Bank’s internal control over financial reporting, prior to approval by the Board and release to the public, and reviewing, as appropriate, releases to the public of significant material non-public financial information of the Bank. Such review of the financial reports of the Bank shall include, when appropriate but at least annually, discussion with management, the internal audit division and the shareholders’ auditor of significant issues regarding accounting principles, practices, financial statement, and MD&A disclosures, including adjustments to GAAP measures (e.g., Items of Note) and significant management estimates and judgments.
The Committee shall review earnings news releases and satisfy itself that adequate procedures are in place for the review of the Bank’s public disclosure of financial information extracted or derived from the Bank’s financial statements, other than the public disclosure in the Bank’s annual and interim financial statements and MD&A and must periodically assess the adequacy of those procedures.
Financial Reporting Process
The Committee shall support the Board in its oversight of the financial reporting process of the Bank including:
| ● | working with management, the shareholders’ auditor and the internal audit division to review the integrity of the Bank’s financial reporting processes; |
| ● | reviewing the process relating to and the certifications of the Chief Executive Officer and the Chief Financial Officer on the integrity of the Bank’s quarterly and annual consolidated financial statements and other disclosure documents as required; |
| ● | considering the key accounting policies of the Bank and reviewing in appropriate detail the basis for significant estimates and judgments including but not limited to actuarial reserves, allowances for loan losses and other valuation allowances and discussing such matters with management and/or the shareholders’ auditor; |
| ● | keeping abreast of trends and best practices in financial reporting including considering, as they arise, topical issues and their application to the Bank; |
| ● | reviewing with management and the shareholders’ auditor significant accounting principles and policies and all critical accounting policies and practices used and any significant audit adjustments made; |
| ● | considering and approving, if appropriate, substantive changes to the Bank’s accounting and financial reporting policies as suggested by management, the shareholders’ auditor, or the internal audit division; |
| ● | establishing regular systems of reporting to the Committee by each of management, the shareholders’ auditor and the internal audit division regarding any significant judgments made in management’s preparation of the financial statements and any significant difficulties encountered during the course of the review or audit, including any restrictions on the scope of work or access to required information; and |
| ● | reviewing tax and tax planning matters that are material to the financial statements. |
The Committee’s Role in the Financial Reporting Process
The shareholders’ auditor is responsible for planning and carrying out, in accordance with professional standards, an audit of the Bank’s annual financial statements and reviews of the Bank’s quarterly financial information. Management of the Bank is responsible for the Bank’s financial reporting process which includes the preparation, presentation and integrity of the Bank’s financial statements and maintenance of appropriate accounting and financial reporting principles and policies, and internal controls and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. The Committee oversees the financial reporting process at the Bank and receives quarterly reporting regarding the process undertaken by management and the results of the review by the
shareholders’ auditor. It is not the duty of the Committee to plan or conduct audits, or to determine that the Bank’s financial statements are complete, accurate and in accordance with International Financial Reporting Standards.
Internal Controls
The shareholders’ auditor is also responsible for planning and carrying out, in accordance with professional standards, an audit of the Bank’s internal control over financial reporting. Management of the Bank is responsible for devising and maintaining effective internal control over financial reporting and for its assessment of the effectiveness of such internal control.
The Committee shall be responsible for overseeing the establishment of the internal control framework and monitoring its effectiveness including:
| ● | reviewing management’s reports related to the establishment and maintenance of an adequate and effective internal control system and processes (including controls related to the prevention, identification and detection of fraud) that are designed to provide assurance in areas including reporting (financial, operational and risk), efficiency and effectiveness of operations and safeguarding assets, monitoring compliance with laws, regulations and guidance, and internal policies, including compliance with section 404 of the U.S. Sarbanes-Oxley Act and similar rules of the Canadian Securities Administrators; |
| ● | meeting with management, the Chief Auditor and the shareholders’ auditor to assess the adequacy and effectiveness of the Bank’s internal controls, including internal control over financial reporting and controls related to the prevention, identification and detection of fraud; |
| ● | overseeing that there are adequate governance structures and control processes for all financial instruments that are measured at fair value for financial reporting purposes; |
| ● | receiving reports from the Risk Committee as considered necessary or desirable with respect to any issues relating to internal control procedures considered by that Committee in the course of undertaking its responsibilities; and |
| ● | reviewing reporting by the Bank to its shareholders regarding internal control over financial reporting. |
Internal Audit Division
The Committee shall oversee the internal audit division of the Bank and any aspects of the internal audit function that are outsourced to a third party. The Committee shall satisfy itself that the internal audit division is sufficiently independent to perform its responsibilities. In addition, the Committee shall:
| ● | review and approve the annual audit plan (including the risk assessment methodology), and any significant changes thereto and satisfy itself that the plan is appropriate, risk-based and addresses all the relevant activities and significant risks over a measurable cycle; |
| ● | review and approve the annual financial budget and resource plan, and review significant updates; |
| ● | review and approve at least annually the Chief Auditor’s mandate and independence attestation, and the mandate of the internal audit division; |
| ● | review key components of significant audit policies |
| ● | confirm the appointment and dismissal of the Chief Auditor; |
| ● | annually convey its view of the performance of the Chief Auditor to the Chief Executive Officer as input into the compensation approval process; |
| ● | at least annually assess the effectiveness and operational adequacy of the internal audit division; |
| ● | review the results of the independent quality assurance review report on the internal audit division conducted on a five-year cycle, including information on the qualifications and independence of the assessor(s) and any potential conflict of interest; |
| ● | review and discuss regular reports prepared by the Chief Auditor, including internal control over financial reporting and all other information outlined in regulatory guidance, together with management’s response and follow-up on outstanding findings, and proactively consider thematic findings across the Bank; |
| ● | provide a forum for the Chief Auditor to have unfettered access to the Committee to raise any internal audit, organizational or industry issues or issues with respect to the relationship and interaction between the internal audit division, management, the shareholders’ auditor and/or regulators; and |
| ● | review reports of deficiencies identified by supervisory authorities related to the internal audit division, including information to demonstrate progress of necessary correction action and remediation, by management, within an appropriate time frame. |
Oversight of Shareholders’ Auditor
The Committee shall annually review and evaluate the performance, qualifications, skills, resources (amount and type), and independence of the shareholders’ auditor and recommend to the Board for recommendation to the shareholders, the appointment of the shareholders’ auditor. The Committee shall be responsible for approving the auditor’s remuneration and shall satisfy itself that the level of audit fees is commensurate with the scope of work to ensure a quality audit. The Committee shall also make recommendations to the Board for approval regarding, if appropriate, termination of the shareholders’ auditor. The shareholders’ auditor shall be accountable to the Committee and the entire Board, as representatives of the shareholders, for its review of the financial statements and controls of the Bank. In addition, the Committee shall:
| ● | review and approve the annual audit plans and engagement letters of the shareholders’ auditor and satisfy itself that the plans are appropriate, risk-based and address all the relevant activities over a measurable cycle; |
| ● | at least annually, review the shareholders’ auditor’s processes for assuring the quality of their audit services including ensuring their independence and any other matters that may affect the audit firm’s ability to serve as shareholders’ auditor; |
| ● | discuss those matters that are required to be communicated by the shareholders’ auditor to the Committee in accordance with the standards established by the Chartered Professional Accountants of Canada and the Public Company Accounting Oversight Board (“PCAOB”) and the requirements of the Bank Act (Canada) and of the Bank’s regulators, including its primary regulator OSFI, as such matters are applicable to the Bank from time to time; |
| ● | review with the shareholders’ auditor any issues that may be brought forward by it, including any audit problems or difficulties, such as restrictions on its audit activities or access to requested information, and management’s responses; |
| ● | request management to take the necessary corrective actions to address any findings and recommendations of the shareholders’ auditor in a timely manner; |
| ● | review with the shareholders’ auditor concerns, if any, about the quality, not just acceptability, of the Bank’s accounting principles and policies as applied in its financial reporting; |
| ● | provide a forum for management and the internal and/or shareholders’ auditor to raise issues regarding their relationship and interaction. To the extent disagreements regarding financial |
| reporting are not resolved, be responsible for the resolution of such disagreements between management and the internal and/or shareholders’ auditor; |
| ● | at least annually, review and evaluate the qualifications, performance and independence of the lead, and other key senior partners of the shareholders’ auditor, monitor the rotation timing and, as required upon rotation of the lead and other key senior partners, assess the qualifications of the shareholders’ auditor’s proposed new lead and other key senior partners and obtain confirmation from the shareholders’ auditor of compliance with the requirements for the qualifications for auditors pursuant to the Bank Act (Canada), and guidance by other applicable regulators; |
| ● | at least every five years, conduct a periodic comprehensive review of the shareholders’ auditor; and |
| ● | annually review and discuss the Canadian Public Accountability Board’s (“CPAB”) and PCAOB’s public reports with the shareholders’ auditor and, as necessary, discuss any CPAB and/or PCAOB findings specific to the inspection of the Bank’s audit. |
Independence of Shareholders’ Auditor
The Committee shall monitor and assess the independence of the shareholders’ auditor through various mechanisms, including:
| ● | reviewing and approving (or recommending to the Board for approval) the audit engagement terms and fees and other legally permissible services to be performed by the shareholders’ auditor for the Bank, with such approval to be given either specifically or pursuant to pre-approval procedures adopted by the Committee; |
| ● | receiving from the shareholders’ auditor, at least annually, a formal written statement confirming independence and delineating all relationships between the shareholders’ auditor and the Bank consistent with the rules of professional conduct of the Canadian provincial chartered accountants’ institutes or other regulatory bodies, as applicable; |
| ● | reviewing and discussing with the Board and the shareholders’ auditor, annually and otherwise as necessary, any relationships or services between the shareholders’ auditor and the Bank or any factors that may impact the objectivity and independence of the shareholders’ auditor; |
| ● | reviewing, approving and monitoring policies and procedures for the employment of past or present partners, or employees of the shareholders’ auditor as required by applicable laws; and |
| ● | reviewing, approving and monitoring other policies and procedures put in place to facilitate auditor independence, such as the criteria for tendering the shareholders’ auditor contract and the rotation of members of the audit engagement team, as applicable. |
Finance Department
The Committee shall oversee the Finance Department of the Bank, including:
| ● | reviewing and approving the mandate of the Finance Department and the mandate of the Chief Financial Officer at least annually; |
| ● | reviewing and approving, at least annually, the Finance Department budget and resource plan, including receiving reports from management on resource adequacy; |
| ● | annually assessing the effectiveness of the Finance Department; |
| ● | periodically reviewing the results of a benchmarking of the Finance Department conducted with the assistance of an independent third party; |
| ● | annually conveying its view of the performance of the Chief Financial Officer to the Chief Executive Officer as input into the compensation approval process; |
| ● | confirming the appointment and dismissal of the Chief Financial Officer; and |
| ● | providing a forum for the Chief Financial Officer to have unfettered access to the Committee to raise any financial reporting issues or issues with respect to the relationship and interaction among the Finance Department, management, the shareholders’ auditor and/or regulators. |
Compliance
The Committee shall oversee the establishment and maintenance of policies and programs reasonably designed to achieve and maintain the Bank’s compliance with the laws and regulations that apply to it, including:
| ● | establishing and maintaining procedures in accordance with regulatory requirements for the receipt, retention and treatment of confidential, anonymous submissions of concerns regarding questionable accounting, internal accounting controls or auditing matters, and receiving reports on such complaints and submissions as required under the applicable policy; and |
| ● | reviewing professional pronouncements and changes to key regulatory requirements relating to accounting rules to the extent they apply to the financial reporting process of the Bank. |
Compliance Department
The Committee shall oversee the Compliance Department of the Bank and the execution of its mandate and shall satisfy itself that the Compliance Department is sufficiently independent to perform its responsibilities. In addition, the Committee shall:
| ● | review and approve its annual plan, including its budget and resources, and any significant changes to the annual plan; |
| ● | annually review and approve the mandate of the Compliance Department and the mandate of the Chief Compliance Officer; |
| ● | at least annually assess the effectiveness of the Compliance Department; |
| ● | periodically review the results of a benchmarking of the Compliance Department conducted with the assistance of an independent third party; |
| ● | confirm the appointment and dismissal of the Chief Compliance Officer; |
| ● | annually convey its view of the performance of the Chief Compliance Officer to the Chief Executive Officer as input into the compensation approval process; |
| ● | review with management the Bank’s compliance with applicable regulatory requirements and the Regulatory Compliance Management (“RCM”) Program; |
| ● | semi-annually receive reports from the Compliance Department on Compliance with Canadian Consumer Protection Requirements as Supervised by the Financial Consumer Agency of Canada (“FCAC”); |
| ● | regularly review and discuss reports prepared by the Chief Compliance Officer for the Committee, including with regard to reports by regulators and supervisory authorities related to the Compliance Department, the Bank’s RCM program or the Bank’s compliance or non-compliance with applicable laws and regulations and follow-up on any outstanding issues including proactive consideration of whether deficiencies in one area may be present in other areas; |
| ● | at least annually review the assessment by the Chief Compliance Officer on the adequacy of, adherence to and effectiveness of the Bank’s day-to-day RCM controls, as well as the Opinion of the Chief Compliance Officer as to whether the RCM Program and controls are sufficiently robust to achieve compliance with the applicable enterprise-wide regulatory requirements; and |
| ● | provide a forum for the Chief Compliance Officer to have unfettered access to the Committee to raise any compliance issues or concerns with respect to the relationship and interaction among the Compliance Department, management and/or regulators. |
Anti-Money Laundering (“AML”) / Anti-Terrorist Financing (“ATF”)
The Committee shall oversee and monitor the establishment, maintenance and ongoing effectiveness of the Anti-Money Laundering / Anti-Terrorist Financing / Economic Sanctions / Anti-Bribery and Anti-Corruption Program (“AML Program”) that is designed so that the Bank is in compliance with the laws and regulations that apply to it as well as its own policies, including:
| ● | reviewing with management the Bank’s compliance with applicable regulatory requirements; |
| ● | reviewing an annual report from the Global Chief Anti-Money Laundering Officer regarding the assessment of the effectiveness of the AML Program, and following up with management on the status of recommendations and suggestions, as appropriate; and |
| ● | reviewing the opinion of the Chief Auditor on the effectiveness of the AML Program every two years and following up with management on the status of recommendations and suggestions, as appropriate. |
Global Anti-Money Laundering Department
The Committee shall oversee the Global Anti-Money Laundering Department of the Bank and the execution of its mandate and shall satisfy itself that the Global AML Department is sufficiently independent to perform its responsibilities. In addition, the Committee shall:
| ● | review and approve the Global AML Department’s annual plan, including its budget and resources, and any significant changes to the annual plan; |
| ● | consider and approve the AML Program, its design and any significant AML/ATF policies, including the TD Global Sanctions Policy; |
| ● | at least annually assess the effectiveness of the Global AML Department; |
| ● | review the results of an independent effectiveness review of the AML Program conducted periodically; |
| ● | periodically review the results of a benchmarking of the Global AML Department conducted with the assistance of an independent third party; |
| ● | annually review and approve the mandate of the Global AML Department and the mandate of the Global Chief Anti-Money Laundering Officer; |
| ● | confirm the appointment and dismissal of the Global Chief Anti-Money Laundering Officer; |
| ● | annually convey its view of the performance of the Global Chief Anti-Money Laundering Officer to the Chief Executive Officer as input into the compensation approval process; |
| ● | regularly review and discuss reports prepared by the Global Chief Anti-Money Laundering Officer for the Committee, including with regard to reports by supervisory authorities related to the AML Program, on the Bank’s compliance or non-compliance with applicable laws and regulations and on the design and operation of the AML Program, the adequacy of resources (people, systems and budget), and any recommendations thereto, and follow-up on any outstanding issues including proactive consideration of whether deficiencies in one area may be present in other areas; and |
| ● | provide a forum for the Global Chief Anti-Money Laundering Officer to have unfettered access to the Committee to raise any compliance issues or issues with respect to the relationship and interaction among the Global AML Department, management and/or regulators. |
General
The Committee shall have the following additional general duties and responsibilities:
| ● | acting as the audit committee for certain Canadian subsidiaries of the Bank that are federally-regulated financial institutions, including meeting on an annual basis, without management present, with the appointed actuaries of the applicable subsidiaries of the Bank that are federally-regulated financial institutions; |
| ● | reviewing with the Bank’s General Counsel any legal matter arising from litigation, asserted claims or regulatory non-compliance that could have a material impact on the Bank’s financial condition and provide a forum for the General Counsel to have unfettered access to the Committee to raise any legal issues; |
| ● | performing such other functions and tasks as may be mandated by regulatory requirements applicable to audit committees or delegated by the Board; |
| ● | conducting an annual evaluation of the Committee to assess its contribution and effectiveness in fulfilling its mandate; |
| ● | review and assess the adequacy of this Charter at least annually and submit this Charter to the Corporate Governance Committee for review and recommendation to the Board for approval; noting that changes considered administrative by the Chair of the Committee and the Board Chair can be reviewed and approved by the Corporate Governance Committee throughout the year and aggregated once per year for review and concurrence by the Board; |
| ● | maintaining minutes or other records of meetings and activities of the Committee; and |
| ● | reporting to the Board on material matters arising at Audit Committee meetings following each meeting of the Committee and reporting as required to the Risk Committee on issues of relevance to it. |
