UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 40-F

[Check one]

 

☐

REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE

SECURITIES EXCHANGE ACT OF 1934

OR

 

☒

ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended October 31, 2020		Commission File Number 1-14446

THE TORONTO-DOMINION BANK

 

(Exact name of Registrant as specified in its charter)

Canada

 

(Province or other jurisdiction of incorporation or organization)

6029

 

(Primary Standard Industrial Classification Code Number (if applicable))

13-5640479

 

(I.R.S. Employer Identification Number (if applicable))

c/o General Counsel’s Office

P.O. Box 1

Toronto-Dominion Centre

Toronto, Ontario M5K 1A2

(416) 308-6963

 

(Address and telephone number of Registrant’s principal executive offices)

Glenn Gibson, The Toronto-Dominion Bank

31 West 52^nd Street

New York, NY

10019-6101

(212) 827-7000

 

(Name, address (including zip code) and telephone number (including area code)

of agent for service in the United States)

 

Securities registered or to be registered pursuant to Section 12(b) of the Act.

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Shares		TD		New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act.

Not Applicable

 

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

Not Applicable

 

(Title of Class)

For annual reports, indicate by check mark the information filed with this form:

 

☒		Annual information form		☒		Audited annual financial statements

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

 

Common Shares			1,816,107,875
Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 1 (Non-Viability Contingent Capital)			20,000,000
Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 3 (Non-Viability Contingent Capital)			20,000,000
Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 5 (Non-Viability Contingent Capital)			20,000,000
Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 7 (Non-Viability Contingent Capital)			14,000,000
Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 9 (Non-Viability Contingent Capital)			8,000,000
Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 12 (Non-Viability Contingent Capital)			28,000,000
Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 14 (Non-Viability Contingent Capital)			40,000,000
Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 16 (Non-Viability Contingent Capital)			14,000,000
Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 18 (Non-Viability Contingent Capital)			14,000,000
Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 20 (Non-Viability Contingent Capital)			16,000,000
Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 22 (Non-Viability Contingent Capital)			14,000,000
Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 24 (Non-Viability Contingent Capital)			18,000,000

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

 

Yes    ☒				No  ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).

 

Yes    ☒				No  ☐

Indicate by check mark whether the Registrant is an emerging growth company, as defined in Rule 12b-2 of the Exchange Act.

Emerging growth company  ☐            

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.

 

☐            

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

 

☒            

Disclosure Controls and Procedures

The disclosure provided under the heading Accounting Standards and Policies – Controls and Procedures – Disclosure Controls and Procedures included in Exhibit 99.2: Management’s Discussion and Analysis is incorporated by reference herein.

Management’s Annual Report on Internal Control Over Financial Reporting

The disclosure provided under the heading Accounting Standards and Policies – Controls and Procedures – Management’s Report on Internal Control Over Financial Reporting included in Exhibit 99.2: Management’s Discussion and Analysis is incorporated by reference herein.

Attestation Report of the Registered Public Accounting Firm

The disclosure provided under the heading Report of Independent Registered Public Accounting Firm To the Shareholders and Directors of The Toronto-Dominion Bank – Opinion on Internal Control over Financial Reporting included in Exhibit 99.3: 2020 Annual Financial Statements is incorporated by reference herein.

Changes in Internal Control Over Financial Reporting

The disclosure provided under the heading Accounting Standards and Policies – Controls and Procedures – Changes in Internal Control Over Financial Reporting included in Exhibit 99.2: Management’s Discussion and Analysis is incorporated by reference herein.

Audit Committee Financial Expert

The disclosure provided under the heading Directors and Executive Officers – Audit Committee included in Exhibit 99.1: Annual Information Form dated December 2, 2020 is incorporated by reference herein.

Code of Ethics

The Registrant has adopted the Code of Conduct and Ethics for Employees and Directors (the “Code”) as its code of ethics applicable to all its employees and directors, including the Registrant’s Group President and Chief Executive Officer, Group Head and Chief Financial Officer, and Senior Vice President, Controller & Chief Accountant. The Registrant posts the Code on its website at www.td.com and also undertakes to provide a copy of the Code to any person without charge upon request. Such request may be made by mail, telephone or e-mail to:

The Toronto-Dominion Bank

TD Shareholder Relations

P.O. Box 1, Toronto-Dominion Centre

Toronto, Ontario, Canada M5K 1A2

Telephone: 1-866-756-8936

E-mail: tdshinfo@td.com

On January 23, 2020, an amended version of the Code was filed with the SEC on Form 6-K and made available on the Registrant’s website.

The key amendments made to the Code at that time included: a) Introduction and Summary – the previous version of the Code used multiple naming conventions for TD’s Board Chair (“Board Chair”, “Chair of the Board”, etc). All references within the body of the Code have been changed to “Board Chair” for consistency; b) Section 2A) – Criminal Record – now expressly states that a “failure to inform TD” of criminal charges may lead to disciplinary action. This is not a change in TD’s approach to such conduct, but rather a clarification of Code language; c) Section 2C) – Alcohol and Substance Use – language added to emphasize that only alcoholic beverages, when approved, can be served in TD business locations, and not other substances (i.e. cannabis); d) Section 2E) – Communicating on Behalf of TD or about TD – language added to further emphasize that TD business cannot be conducted using an employee’s personal email address; e) Section 3A) – Introduction to Conflicts of Interest – minor language modification to protect against any confusion that TD is only concerned about ethical ‘corporate’ conduct, as opposed to ethical conduct more broadly. In this same section, the term counterparties was removed as it was deemed confusing and such parties are effectively covered by the term “other stakeholders”; f)

Section 3G) – Personal Borrowing or Lending – paragraph was modified to clarify that borrowing or lending between customer and employee or employee and employee is not permitted unless it is between relatives or those who share a financial or close personal relationship or the customer is a financial institution or one that offers credit to customers (provided the terms of the loan are in the ordinary course of the customer’s business); and g) Section 7B) – Reporting Violations – modified language so that it confirmed that Between Us is an informal channel available to employees for confidential, informal and impartial guidance on how to report a violation of the Code. In addition to these changes, certain other editorial, technical, organizational, administrative and non-substantive amendments were made to the Code.

No waivers from the provisions of the Code were granted in the fiscal year ended October 31, 2020 to the Registrant’s Group President and Chief Executive Officer, Group Head and Chief Financial Officer, and Senior Vice President, Controller & Chief Accountant.

Principal Accountant Fees and Services

The disclosure regarding Audit Fees, Audit-Related Fees, Tax Fees and All Other Fees provided under the heading Directors and Executive Officers – Pre-Approval Policies and Shareholders’ Auditor Service Fees included in Exhibit 99.1: Annual Information Form dated December 2, 2020 is incorporated by reference herein.

Pre-Approval Policy for Audit and Non-Audit Services

The disclosure provided under the heading Directors and Executive Officers – Pre-Approval Policies and Shareholders’ Auditor Service Fees included in Exhibit 99.1: Annual Information Form dated December 2, 2020 is incorporated by reference herein.

During the fiscal year ended October 31, 2020, the waiver of pre-approval provisions set forth in the applicable rules of the SEC were not utilized for any services related to Audit-Related Fees, Tax Fees or All Other Fees and the Audit Committee did not approve any such fees subject to the waiver of pre-approval provisions.

Hours Expended on Audit Attributed to Persons Other than the Principal Accountant’s Employees

Not Applicable

Off-balance Sheet Arrangements

The disclosure provided under the heading Group Financial Condition – Securitization and Off-Balance Sheet Arrangements included in Exhibit 99.2: Management’s Discussion and Analysis is incorporated by reference herein.

Tabular Disclosure of Contractual Obligations

The disclosure provided in Table 57: Remaining Contractual Maturity included in Exhibit 99.2: Management’s Discussion and Analysis is incorporated by reference herein.

Identification of the Audit Committee

The disclosure provided under the heading Directors and Executive Officers – Audit Committee included in Exhibit 99.1: Annual Information Form dated December 2, 2020 identifying the Registrant’s Audit Committee is incorporated by reference herein.

Mine Safety Disclosure

Not Applicable

Undertaking

Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

Comparison of New York Stock Exchange Corporate Governance Rules

A comparison of NYSE Corporate Governance Rules required to be followed by U.S. Domestic Issuers under the NYSE’s listing standards and the Corporate Governance practices of The Toronto-Dominion Bank (disclosure required by section 303A.11 of the NYSE Listed Company Manual) is available on the Corporate Governance section of the Registrant’s website at www.td.com/governance.

Signatures

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.

 

Registrant:		THE TORONTO-DOMINION BANK
By:		/s/ Riaz Ahmed
Name:		Riaz Ahmed
Title:		Group Head and Chief Financial Officer
Date:		December 3, 2020

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 40-F

ANNUAL REPORT PURSUANT TO

SECTION 13(a) or 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

 

THE TORONTO-DOMINION BANK

 

 

EXHIBITS

 

 

INDEX TO EXHIBITS

 

No.		Exhibits
99.1		Annual Information Form dated December 2, 2020
99.2		Management’s Discussion and Analysis
99.3		2020 Annual Financial Statements
99.4		Industry Guide 3 – Return on Assets, Dividend Payouts, and Equity to Assets Ratios
99.5		Code of Ethics
99.6		Consent of Independent Registered Public Accounting Firm
99.7		Certification Pursuant to Section 302 of the U.S. Sarbanes-Oxley Act of 2002
99.8		Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the U.S. Sarbanes-Oxley Act of 2002
101		The following financial information from The Toronto-Dominion Bank’s Annual Report on Form 40-F for the year ended October 31, 2020 formatted in XBRL: (i) Consolidated Balance Sheet as at October 31, 2020 and 2019; (ii) Consolidated Statements of Income, Comprehensive Income, Changes in Equity, and Cash Flows for each of the years in the three-year period ended October 31, 2020; and (iii) Notes to Consolidated Financial Statements.

Exhibit 99.1

 

The Toronto-Dominion Bank

ANNUAL INFORMATION FORM

December 2, 2020

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, 2020 (the “2020 MD&A”) and are incorporated by reference into this AIF.

 

Page / Incorporated by Reference From

Page Reference in AIF

Annual Financial Statement

2020 MD&A

CORPORATE STRUCTURE

Name, Address and Incorporation

4

–

–

Intercorporate Relationships

4

–

–

GENERAL DEVELOPMENT OF THE BUSINESS

Three Year History

4

–

9, 15-26

DESCRIPTION OF THE BUSINESS

Review of Business, including Foreign Operations

–

11-15

6, 15-26

Investment in The Charles Schwab Corporation

5

68

6, 9, 23, 51-52

Competition

–

–

57

Intangible Properties

–

25, 29, 70-71

–

Average Number of Employees

6

–

–

Lending

–

–

31-41, 64-68

Social and Environmental Policies

6

–

89

Risk Factors

6

–

52-89

DIVIDENDS

Dividends per Share for the Bank (October 31st year-end)

7

–

–

Dividends for TD Ameritrade (September 30th year-end)

7

–

–

Dividend Restrictions

8

78

46

CAPITAL STRUCTURE

Common Shares

8

76-78

–

Preferred Shares

8

76-78

–

Constraints

9

–

–

Ratings

10

–

80- 81

MARKET FOR SECURITIES OF THE BANK

Market Listings

12

–

–

Trading Price and Volume

12

–

–

Prior Sales

13

75

–

ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTIONS ON TRANSFER

13

69

–

DIRECTORS AND EXECUTIVE OFFICERS

Directors and Board Committees of the Bank

14

–

–

Audit Committee

18

–

–

Additional Information Regarding the Audit Committee and Shareholders’ Auditor

19

–

–

Executive Officers of the Bank

20

–

–

Shareholdings of Directors and Executive Officers

21

–

–

Additional Disclosure for Directors and Executive Officers

21

–

–

Pre-Approval Policies and Shareholders’ Auditor Service Fees

22

–

–

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

Legal Proceedings

23

90-91

–

Regulatory Actions

23

–

–

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

23

–

–

TRANSFER AGENTS AND REGISTRARS

Transfer Agent

23

–

–

Co-transfer Agent and Registrar

24

–

–

INTERESTS OF EXPERTS

24

–

–

ADDITIONAL INFORMATION

24

–

–

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, 2020.

 

- 2 -

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, statements made in the Bank’s Management’s Discussion and Analysis (“2020 MD&A”) in the Bank’s 2020 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 headings “Key Priorities for 2021”, and for the Corporate segment, “Focus for 2021”, and in other statements regarding the Bank’s objectives and priorities for 2021 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 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 to which the Bank is exposed; 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; environmental and social risk; 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; 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 2020 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 headings “Significant Events” in the relevant MD&A, which applicable releases may be found on www.td.com. All such factors should be considered carefully, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements, when making decisions with respect

 

- 3 -

to the Bank and 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 2020 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 2021”, and for the Corporate segment, “Focus for 2021”, 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

As at October 31, 2020, TD was the second largest Canadian bank in terms of market capitalization. TD Bank Group is the sixth largest bank in North America by branches and serves over 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 14 million active online and mobile customers. TD had CDN$1.7 trillion in assets on October 31, 2020. 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 1,200 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 9 and 15 to 30 of the 2020 MD&A.

On January 8, 2018, the Bank completed its acquisition of Layer 6 Inc., a world-renowned artificial intelligence company based in Toronto, Ontario.

 

- 4 -

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 and lockup restrictions, including, subject to certain exceptions, transfer restrictions.

In addition, on November 25, 2019, the Bank and Schwab entered into an insured deposit account agreement (the “Schwab IDA Agreement”), which became effective upon closing of the Schwab transaction and has an initial expiration date of July 1, 2031. Starting on July 1, 2021, deposits under the Schwab IDA Agreement, which were $195 billion (US$146 billion) as at October 31, 2020, can be reduced at Schwab’s option by up to US$10 billion a year (subject to certain adjustments based on the change in the balance of the sweep deposits between closing and July 1, 2021), with a floor of US$50 billion. The servicing fee under the Schwab IDA Agreement is set at 15 bps per annum on the aggregate average daily balance in the sweep accounts.

DESCRIPTION OF THE BUSINESS

Descriptions of TD’s significant business segments and related information are provided on pages 3 and 15 to 26 of the 2020 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 13.5% stake in Schwab as at October 31, 2020.

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.

 

- 5 -

Average Number of Employees

TD had an average of 89,598 full-time equivalent employees for fiscal 2020.

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 page 89 of the 2020 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 to 89 of the 2020 MD&A, which is incorporated by reference.

 

- 6 -

DIVIDENDS

Dividends per Share for the Bank (October 31^st year-end)

 

Type of Shares		2020				2019				2018
Common Shares		$	3.11			$	2.89			$	2.61
Preferred Shares
Series S1			–				–			$	0.63
Series T2			–				–			$	0.50
Series Y3			–				–			$	0.89
Series Z4			–				–			$	0.69
Series 15		$	0.92			$	0.98			$	0.98
Series 35		$	0.92			$	0.94			$	0.95
Series 55		$	0.96			$	0.94			$	0.94
Series 75		$	0.88			$	0.90			$	0.90
Series 95		$	0.93			$	0.93			$	0.93
Series 115,6		$	1.23			$	1.23			$	1.23
Series 125		$	1.38			$	1.38			$	1.38
Series 145		$	1.21			$	1.21			$	1.21
Series 165		$	1.13			$	1.13			$	1.13
Series 185		$	1.18			$	1.18			$	0.74
Series 205		$	1.19			$	1.35				–
Series 225		$	1.30			$	0.98				–
Series 245		$	1.28			$	0.52				–

Notes:

1

On July 31, 2018, the Bank redeemed all of its 5,387,491 outstanding Non-Cumulative Class A First Preferred Shares, Series S.

2

On July 31, 2018, the Bank redeemed all of its 4,612,509 outstanding Non-Cumulative Class A First Preferred Shares, Series T.

3

On October 31, 2018, the Bank redeemed all of its 5,481,853 outstanding Non-Cumulative Class A First Preferred Shares, Series Y.

4

On October 31, 2018, the Bank redeemed all of its 4,518,147 outstanding Non-Cumulative Class A First Preferred Shares, Series Z.

5

Non-viability contingent capital (NVCC).

6

On October 31, 2020, the Bank redeemed all of its 6,000,000 outstanding Non-Cumulative Class A First Preferred Shares, Series 11.

Dividends for TD Ameritrade (September 30^th year-end)

TD Ameritrade declared a US$0.31 per share quarterly cash dividend on its common stock during each quarter of its 2020 fiscal year.

 

- 7 -

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.

CAPITAL STRUCTURE

The following summary of the Bank’s share capital is qualified in its entirety by the Bank’s by-laws and the actual terms and conditions of such shares.

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.

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

 

- 8 -

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.

Additional information relating to capital structure can be found on pages 42 to 49 of the 2020 MD&A.

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

 

- 9 -

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.

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 76 to 81 of the 2020 MD&A.

As at October 31, 2020, 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

Aa1

2 of 21

Senior Debt2

Aa3

4 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

Outlook

Stable

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

Outlook

Stable

 

- 10 -

Rating

Rank*

DBRS Morningstar

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

Outlook

Stable

  * Relative rank of each rating within the rating agency’s overall classification system.

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, 2020, 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 ‘Negative’ 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, 2020 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.

 

- 11 -

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. 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. 2019		Dec. 2019		Jan. 2020		Feb. 2020		March 2020		April 2020		May 2020		June 2020		July 2020		Aug. 2020		Sept. 2020		Oct. 2020
High ($)		77.72		76.83		74.71		76.10		70.32		61.85		63.09		66.29		62.51		67.40		65.65		63.91
Low ($)		75.14		72.43		72.65		67.69		49.01		53.92		53.19		59.11		58.28		59.30		60.09		57.44
Vol.(‘000)		53,860		68,030		83,547		63,913		222,307		151,862		91,589		120,401		149,059		74,997		100,852		157,866

 

PREFERRED SHARES
		Nov. 2019		Dec. 2019		Jan. 2020		Feb. 2020		March 2020		April 2020		May 2020		June 2020		July 2020		Aug. 2020		Sept. 2020		Oct. 2020
Series 11 High ($) Low ($) Vol.(‘000)		17.20   16.75 303		17.56   16.66 391		17.85   17.18 495		17.55   16.25 407		16.36   10.21 1,218		15.15   12.62 398		15.25   14.08 518		15.80   14.35 277		17.93   14.86 374		18.50   16.80 337		18.44   17.32 334		17.89   17.51 537
Series 31 High ($) Low ($) Vol.(‘000)		17.24 16.73 318		17.57 16.64 465		17.80 17.24 557		17.85 16.21 256		16.49 10.57 772		15.08 12.51 787		15.22 14.10 341		15.99 14.38 318		17.04 14.90 148		18.59 16.81 149		18.49 17.36 227		17.86 17.39 399
Series 51 High ($) Low ($) Vol.(‘000)		17.24 16.60 388		17.89 16.67 678		18.00 17.40 301		17.82 16.37 148		16.60 10.61 735		15.50 12.80 322		15.41 14.39 385		15.99 14.72 228		17.60 14.75 262		19.00 17.10 210		18.98 17.87 209		18.60 18.08 425
Series 71 High ($) Low ($) Vol.(‘000)		19.37 18.61 197		19.80 19.00 406		20.18 19.38 272		19.90 18.22 180		18.50 12.00 575		15.74 13.71 183		15.90 14.90 293		17.00 15.50 324		19.51 15.91 237		20.73 18.62 320		21.06 18.71 117		19.84 18.94 67
Series 91 High ($) Low ($) Vol.(‘000)		19.73 18.81 146		20.03 19.35 236		20.54 19.64 95		19.99 18.31 134		18.30 12.16 346		16.53 13.81 117		16.64 15.30 214		17.09 15.79 202		19.49 16.00 178		21.73 18.78 124		21.75 19.55 167		20.35 19.42 167
Series 111,2 High ($) Low ($) Vol.(‘000)		25.00 24.65 81		24.89 24.67 44		24.81 24.41 75		24.87 24.37 65		24.78 18.55 144		23.20 20.80 85		23.40 22.89 61		24.24 23.46 52		24.75 23.96 76		25.23 24.65 67		26.26 25.10 184		26.28 25.97 265
Series 121 High ($) Low ($) Vol.(‘000)		25.83 25.55 111		26.10 25.75 264		26.10 25.65 226		25.95 25.58 130		25.82 18.46 1,407		24.50 20.86 576		24.98 24.19 603		25.10 24.36 200		25.74 24.77 288		25.68 25.25 130		25.65 25.15 333		25.70 25.24 408

 

- 12 -

PREFERRED SHARES
		Nov. 2019		Dec. 2019		Jan. 2020		Feb. 2020		March 2020		April 2020		May 2020		June 2020		July 2020		Aug. 2020		Sept. 2020		Oct. 2020
Series 141 High ($) Low ($) Vol.(‘000)		25.53   25.18 327		25.90   25.40 220		25.81   25.33 227		25.81   25.36 341		25.60   16.51 960		23.45   19.00 428		23.80   22.01 386		23.62   22.54 329		25.42   22.80 543		25.35   24.91 321		25.48   24.91 622		25.66   25.18 500
Series 161 High ($) Low ($) Vol.(‘000)		21.26 20.62 298		21.08 20.33 461		21.86 20.89 136		21.25 20.00 162		19.89 12.00 411		18.49 14.72 204		18.74 17.33 221		18.68 17.11 148		21.65 18.03 391		22.85 20.90 90		23.26 21.42 132		22.73 21.55 282
Series 181 High ($) Low ($) Vol.(‘000)		19.83 19.17 369		20.09 19.25 830		20.44 19.99 211		20.27 18.71 131		19.01 11.83 468		17.85 14.59 598		17.84 16.24 256		17.90 16.55 171		20.16 17.25 463		20.79 19.66 122		21.25 19.83 294		20.58 20.00 217
Series 201 High ($) Low ($) Vol.(‘000)		19.47 18.80 475		19.87 18.76 738		20.22 19.59 255		19.99 18.60 193		18.65 12.35 700		17.35 14.27 633		17.39 15.80 256		17.44 16.40 289		19.31 16.87 572		20.75 18.90 307		21.00 19.72 207		20.40 19.75 221
Series 221 High ($) Low ($) Vol.(‘000)		24.47 23.84 274		24.29 23.51 365		24.28 23.75 142		24.39 23.20 225		23.17 13.71 716		21.40 16.80 395		20.90 19.56 167		21.20 19.70 490		23.75 19.80 401		24.35 23.35 80		24.70 23.55 329		24.90 24.10 441
Series 241 High ($) Low ($) Vol.(‘000)		24.75 24.39 701		24.89 24.20 197		24.85 24.40 160		24.83 23.45 207		23.52 15.50 557		20.95 17.50 644		22.10 20.66 194		22.40 20.76 345		24.75 21.26 761		24.78 24.20 415		25.00 24.59 571		25.35 24.75 764

Notes:

1.	Non-viability contingent capital (NVCC).

2.	On October 31, 2020, the Bank redeemed all of its 6,000,000 outstanding Non-Cumulative Class A First Preferred Shares, Series 11.

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 more information on the Bank’s subordinated debentures, please see Note 19 of the Annual Financial Statements for the year ended October 31, 2020, which note is 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		Percentage of class
Common Shares1		289,083		0.02%

 

 

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. On November 1, 2020, 3,207,575 of the escrowed shares issued in satisfaction of a portion of the purchase price were released from escrow and delivered to the applicable shareholders. A portion of the common shares of each employee shareholder intended to replace share based awards continue to be held in escrow for a period of three years following the acquisition date, subject to the continued employment of such employee shareholder. AST Trust Company (Canada) is acting as Escrow Agent.

 

- 13 -

DIRECTORS AND EXECUTIVE OFFICERS

Directors and Board Committees of the Bank

The following table sets forth, as at December 2, 2020, 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
Amy W. Brinkley Consultant, AWB Consulting, LLC Charlotte, North Carolina, U.S.A.		September 2010
Brian C. Ferguson Corporate Director, and former President & Chief Executive Officer, Cenovus Energy Inc. Calgary, Alberta, Canada		March 2015
Colleen A. Goggins Corporate Director, and retired Worldwide Chairman, Consumer Group, Johnson & Johnson Princeton, New Jersey, U.S.A.		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 Corporate Director, and retired Executive Vice President, The Dow Chemical Company Sanford, Michigan, U.S.A.		December 2013
Brian M. Levitt Board Chair, The Toronto-Dominion Bank Kingston, Ontario, Canada		December 2008
Alan N. MacGibbon Corporate Director, and retired Managing Partner and Chief Executive of Deloitte LLP (Canada) Oakville, Ontario, Canada		April 2014
Karen E. Maidment Corporate Director, and former Chief Financial and Administrative Officer, BMO Financial Group Cambridge, Ontario, Canada		September 2011
Bharat B. Masrani Group President and Chief Executive Officer, TD Bank Group Toronto, Ontario, Canada		April 2014
Irene R. Miller Chief Executive Officer, Akim, Inc. New York, New York, U.S.A.		May 2006

 

- 14 -

Director Name Principal Occupation & Municipality of Residence		Director Since
Nadir H. Mohamed Corporate Director, and former President and Chief Executive Officer, Rogers Communications Inc. Toronto, Ontario, Canada		April 2008
Claude Mongeau Corporate Director, and former President and Chief Executive Officer, Canadian National Railway Company Outremont, Quebec, Canada		March 2015
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. Mongeau was President and Chief Executive Officer of Canadian National Railway Company prior to July 2016. 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 1, 2021. 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.

 

- 15 -

The following table sets forth the Committees of the Bank’s Board, the members of each Committee as at December 2, 2020 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 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 this 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

 

- 16 -

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 benefits plans.
Risk Committee		Amy W. Brinkley (Chair) 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 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 Enterprise Risk Framework; •  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, 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

 

- 17 -

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

 

- 18 -

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, 2020, 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.

 

- 19 -

Executive Officers of the Bank

The following individuals are executive officers of the Bank:

 

Executive Officer		Principal Occupation		Municipality of Residence
Riaz Ahmed		Group Head and Chief Financial Officer, TD Bank Group		Oakville, Ontario, Canada
Ajai K. Bambawale		Group Head and Chief Risk Officer, TD Bank Group		Toronto, Ontario, Canada
Greg Braca		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. Currie		Group Head, Canadian Personal Banking, TD Bank Group		Toronto, Ontario, Canada
Robert E. Dorrance		Group Head, Wholesale Banking, TD Bank Group and Chairman, Chief Executive Officer and President, TD Securities		Toronto, Ontario, Canada
Paul C. Douglas		Group Head, Canadian Business Banking, TD Bank Group		Burlington, Ontario, Canada
Bharat B. Masrani		Group President and Chief Executive Officer, TD Bank Group		Toronto, Ontario, Canada
Michael G. Rhodes		Group Head, Innovation, Technology and Shared Services, TD Bank Group		Wilmington, Delaware, U.S.A.
Leovigildo Salom		Group Head, Wealth Management and TD Insurance, TD Bank Group		Toronto, Ontario, Canada

Except as disclosed below, all executive officers have had the same principal occupation for the past five years.

Prior to commencing his current Group Head role on January 2, 2016, Mr. Ahmed was Group Head, Insurance, Credit Cards, and Enterprise Strategy, TD Bank Group from July 1, 2013 to January 2, 2016.

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, 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, and Executive Vice President, TD Bank Group and Head of Corporate and Specialty Banking, TD Bank, America’s Most Convenient Bank^® from October 25, 2012 to October 31, 2016.

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,

 

- 20 -

Enterprise Projects and General Counsel, TD Bank Group) from November 1, 2014 to December 11, 2016.

Prior to commencing her current role as Group Head, Canadian Personal Banking, TD Bank Group on January 2, 2016, Ms. Currie was Group Head, Direct Channels, Technology, Marketing and People Strategies, TD Bank Group from November 1, 2014 to January 1, 2016.

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.

Shareholdings of Directors and Executive Officers

To the knowledge of the Bank, as at October 31, 2020, 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 2,078,701 of the Bank’s common shares, representing approximately 0.11% 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 2, 2020, 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.

 

- 21 -

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-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)			2020				2019				2018
Audit fees1		$	28,283			$	26,395			$	26,452
Audit-related fees2			1,334				1,477				1,387
Tax fees3			1,481				1,794				2,679
All other fees4			1,680				512				1,799
Total		$	32,778			$	30,178			$	32,317

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, tax and reporting standards; attest services 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 insolvency and viability matters, limited to cases in which the Bank is a minority syndicate participant and not in a position to influence or select the external audit firm to use. In these instances, the shareholders’ auditor is retained to provide assistance on operational business reviews, lender negotiations, business plan assessments, debt restructuring and asset recovery. Also included in this category are fees for: reports on control procedures at a service organization; audit and tax services for SEC-registered funds, subject to the SEC investment

 

- 22 -

company complexes rules as well as other funds and related management entities; benchmark studies; regulatory advisory services; and performance and process improvement services.

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, 2020, 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.² 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, TD Prime Services paid $2,500 for a Minor Rule Violation to the U.S. Securities and Exchange Commission and TD Bank, N.A. was issued a Consent Order by the Consumer Financial Protection Bureau and paid a civil money penalty in the amount of USD $25,000,000.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

To the best of our knowledge, the Bank confirms that, as at December 2, 2020, 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

AST Trust Company (Canada)

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

 

2	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.

 

- 23 -

Co-transfer Agent and Registrar

Computershare

P.O. Box 505000

Louisville, KY 40233

or

462 South 4^th 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

INTERESTS OF EXPERTS

The Consolidated Financial Statements of the Bank for the year ended October 31, 2020 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, 2020.

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.

 

- 24 -

Appendix “A”

Intercorporate Relationships

The following is a list of the directly or indirectly held significant subsidiaries.

 

SIGNIFICANT SUBSIDIARIES1
(millions of Canadian dollars)						As at October 31, 2020
North America		Address of Head or Principal Office2		Description		Carrying value of shares owned by the Bank3
Meloche Monnex Inc.		Montreal, Québec		Holding Company		$	1,725
Security National Insurance Company		Montreal, Québec		Insurance Company
Primmum Insurance Company		Toronto, Ontario		Insurance Company
TD Direct Insurance Inc.		Toronto, Ontario		Insurance Company
TD General Insurance Company		Toronto, Ontario		Insurance Company
TD Home and Auto Insurance Company		Toronto, Ontario		Insurance Company
TD Wealth Holdings Canada Limited		Toronto, Ontario		Holding Company			1,164
TD Asset Management Inc.		Toronto, Ontario		Dealing in Securities
GMI Servicing Inc.		Regina, Saskatchewan		Mortgage Servicing Entity
TD Waterhouse Private Investment Counsel Inc.		Toronto, Ontario		Investment Counselling and Portfolio Management
TD Auto Finance (Canada) Inc.		Toronto, Ontario		Automotive Finance Entity			2,791
TD Group US Holdings LLC		Wilmington, Delaware		Holding Company			73,421
Toronto Dominion Holdings (U.S.A.), Inc.		New York, New York		Holding Company
TD Prime Services LLC		New York, New York		Securities Dealer
TD Securities (USA) LLC		New York, New York		Securities Dealer
Toronto Dominion (Texas) LLC		New York, New York		Financial Services Entity
Toronto Dominion (New York) LLC		New York, New York		Financial Services Entity
Toronto Dominion Capital (U.S.A.), Inc.		New York, New York		Small Business Investment Company
Toronto Dominion Investments, Inc.		New York, New York		Merchant Banking and Investments
TD Bank US Holding Company		Cherry Hill, New Jersey		Holding Company
Epoch Investment Partners, Inc.		New York, New York		Investment Counselling and Portfolio Management
TDAM USA Inc.		New York, New York		Investment Counselling and Portfolio Management
TD Bank USA, National Association		Cherry Hill, New Jersey		U.S. National Bank
TD Bank, National Association		Cherry Hill, New Jersey		U.S. National Bank
TD Auto Finance LLC		Farmington Hills, Michigan		Automotive Finance Entity
TD Equipment Finance, Inc.		Cherry Hill, New Jersey		Financial Services Entity
TD Private Client Wealth LLC		New York, New York		Broker-dealer and Registered Investment Advisor
TD Wealth Management Services Inc.		Cherry Hill, New Jersey		Insurance Agency
TD Investment Services Inc.		Toronto, Ontario		Mutual Fund Dealer			30
TD Life Insurance Company		Toronto, Ontario		Insurance Company			91
TD Mortgage Corporation		Toronto, Ontario		Deposit-Taking Entity			10,384
TD Pacific Mortgage Corporation		Vancouver, British Columbia		Deposit-Taking Entity
The Canada Trust Company		Toronto, Ontario		Trust, Loans, and Deposit-Taking Entity
TD Securities Inc.		Toronto, Ontario		Investment Dealer and Broker			2,086
TD Vermillion Holdings Limited		Toronto, Ontario		Holding Company			27,212
TD Financial International Ltd.		Hamilton, Bermuda		Holding Company
TD Reinsurance (Barbados) Inc.		St. James, Barbados		Reinsurance Company
TD Waterhouse Canada Inc.		Toronto, Ontario		Investment Dealer			3,104
International
TD Bank N.V.		Amsterdam, The Netherlands		Dutch Bank			486
TD Ireland Unlimited Company		Dublin, Ireland		Holding Company			886
TD Global Finance Unlimited Company		Dublin, Ireland		Securities Dealer
TD Securities (Japan) Co. Ltd.		Tokyo, Japan		Securities Dealer			13
Toronto Dominion Australia Limited		Sydney, Australia		Securities Dealer			100
Toronto Dominion Investments B.V.		London, England		Holding Company			1,165
TD Bank Europe Limited		London, England		UK Bank
Toronto Dominion Holdings (U.K.) Limited		London, England		Holding Company
TD Securities Limited		London, England		Securities Dealer
Toronto Dominion (South East Asia) Limited		Singapore, Singapore		Financial Institution			1,067

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. Certain amounts have been adjusted to conform with the presentation adopted in the current period.

Appendix “B”

Description of Ratings

 

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 one year 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 for 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 one year 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.

 

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.

 

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.

Rating trends provide guidance with respect to DBRS’s opinion regarding the outlook for a rating. The ‘Stable’ rating trend indicates a lower likelihood that the rating could change in the future than would be the case if the rating trend was positive or negative.

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 ~ ~

 

 

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 consideration, 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 which 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 meet 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 (i.e. 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, 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 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;

 

●

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 all information outlined in regulatory guidance, together with management’s response and follow-up on outstanding issues, and proactively consider thematic issues 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 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 partner of the shareholders’ auditor, monitor the rotation timing and, as required upon rotation of the lead partner, assess the qualifications of the shareholders’ auditor’s proposed new lead partner and obtain confirmation from the shareholders’ auditor that he or she is in

compliance with the requirements for the qualifications for auditors pursuant to the Bank Act (Canada);

 

●

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) public report with the shareholders’ auditor and, as necessary, discuss any CPAB 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;

 

●

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; and

 

●

acting as the Board’s compliance oversight committee in respect of the Volcker Rule within the Dodd-Frank Wall Street Reform and Consumer Protection Act (U.S.), including receiving reports, at least annually, from senior management and control functions on the effectiveness of and compliance with matters relating to the TDBG Enterprise Written Volcker Compliance Program.

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 regulatory requirements enterprise-wide; 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, 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 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.

Exhibit 99.2

MANAGEMENT’S DISCUSSION AND ANALYSIS

This Management’s Discussion and Analysis (MD&A) is presented to enable readers to assess material changes in the financial condition and operating results of TD Bank Group (“TD” or the “Bank”) for the year ended October 31, 2020, compared with the corresponding period in the prior years. This MD&A should be read in conjunction with the audited Consolidated Financial Statements and related Notes for the year ended October 31, 2020. This MD&A is dated December 2, 2020. Unless otherwise indicated, all amounts are expressed in Canadian dollars and have been primarily derived from the Bank’s annual Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Note that certain comparative amounts have been revised to conform with the presentation adopted in the current period.

 

 

Additional information relating to the Bank, including the Bank’s Annual Information Form, is available on the Bank’s website at http://www.td.com, on SEDAR at http://www.sedar.com, and on the U.S. Securities and Exchange Commission’s website at http://www.sec.gov (EDGAR filers section).

 

 

TD BANK GROUP • 2020 ANNUAL REPORT • MANAGEMENT'S DISCUSSION & ANALYSIS			Page 1

 

(millions of Canadian dollars, except where noted)			2020				2019				2018
Results of operations
Total revenues – reported		$	43,646			$	41,065			$	38,892
Total revenues – adjusted1			42,225				41,065				38,981
Provision for credit losses			7,242				3,029				2,480
Insurance claims and related expenses			2,886				2,787				2,444
Non-interest expenses – reported			21,604				22,020				20,195
Non-interest expenses – adjusted1			21,338				21,085				19,943
Net income – reported			11,895				11,686				11,334
Net income – adjusted1			9,968				12,503				12,183
Financial positions (billions of Canadian dollars)
Total loans net of allowance for loan losses		$	717.5			$	684.6			$	646.4
Total assets			1,715.9				1,415.3				1,334.9
Total deposits			1,135.3				887.0				851.4
Total equity			95.5				87.7				80.0
Total Common Equity Tier 1 Capital risk-weighted assets2			478.9				456.0				435.6
Financial ratios
Return on common equity – reported			13.6	%			14.5	%			15.7	%
Return on common equity – adjusted1,3			11.4				15.6				16.9
Return on tangible common equity1,3			18.7				20.5				22.7
Return on tangible common equity – adjusted1,3			15.3				21.5				23.9
Efficiency ratio – reported			49.5				53.6				51.9
Efficiency ratio – adjusted1			50.5				51.3				51.2
Provision for credit losses as a % of net average loans and acceptances4			1.00				0.45				0.39
Common share information – reported (Canadian dollars)
Per share earnings
Basic		$	6.43			$	6.26			$	6.02
Diluted			6.43				6.25				6.01
Dividends per common share			3.11				2.89				2.61
Book value per share			49.49				45.20				40.50
Closing share price5			58.78				75.21				73.03
Shares outstanding (millions)
Average basic			1,807.3				1,824.2				1,835.4
Average diluted			1,808.8				1,827.3				1,839.5
End of period			1,815.6				1,811.9				1,828.3
Market capitalization (billions of Canadian dollars)		$	106.7			$	136.3			$	133.5
Dividend yield6			4.8	%			3.9	%			3.5	%
Dividend payout ratio			48.3				46.1				43.3
Price-earnings ratio			9.2				12.0				12.2
Total shareholder return (1-year)7			(17.9	)			7.1				3.1
Common share information – adjusted (Canadian dollars)1
Per share earnings
Basic		$	5.37			$	6.71			$	6.48
Diluted			5.36				6.69				6.47
Dividend payout ratio			57.9	%			43.0	%			40.2	%
Price-earnings ratio			11.0				11.2				11.3
Capital ratios
Common Equity Tier 1 Capital ratio2			13.1	%			12.1	%			12.0	%
Tier 1 Capital ratio2			14.4				13.5				13.7
Total Capital ratio2			16.7				16.3				16.2
Leverage ratio			4.5				4.0				4.2

 

1

The Toronto-Dominion Bank (“TD” or the “Bank”) prepares its Consolidated Financial Statements in accordance with IFRS, the current Generally Accepted Accounting Principles (GAAP), and refers to results prepared in accordance with IFRS as the “reported” results. The Bank also utilizes non-GAAP financial measures to arrive at “adjusted” results to assess each of its businesses and to measure overall Bank performance. To arrive at adjusted results, the Bank removes “items of note”, from reported results. Refer to the “Financial Results Overview” in MD&A for further explanation, a list of the items of note, and a reconciliation of non-GAAP financial measures.

2

Each capital ratio has its own risk-weighted assets (RWA) measure due to the Office of the Superintendent of Financial Institutions Canada (OSFI) prescribed scalar for inclusion of the Credit Valuation Adjustment (CVA). For fiscal 2020 and 2019, the scalars for inclusion of CVA for Common Equity Tier 1 (CET1), Tier 1, and Total Capital RWA are all 100%. For fiscal 2018, the scalars were 80%, 83%, and 86%, respectively.

3	Metrics are non-GAAP financial measures. Refer to the “Return on Common Equity” and “Return on Tangible Common Equity” sections of this document for an explanation.

4	Excludes acquired credit-impaired (ACI) loans.

5	Toronto Stock Exchange (TSX) closing market price.

6	Dividend yield is calculated as the dividend per common share for the year divided by the daily average closing stock price during the year.

7	Total shareholder return is calculated based on share price movement and dividends reinvested over a trailing one-year period.

 

TD BANK GROUP • 2020 ANNUAL REPORT • MANAGEMENT'S DISCUSSION & ANALYSIS			Page 2