​In our March, 2015 edition of InSync, we provided you with an update on CSA Staff Notice 54-303, which was published in January of 2015.

The following five improvements were identified in the Notice:

  1. Modernizing how meeting tabulators receive omnibus proxies;
  2. Ensuring the accuracy and completeness of vote entitlement information in omnibus proxies;
  3. Enabling intermediaries to find out their Official Vote Entitlement for a meeting;
  4. Increasing consistency in how tabulators reconcile proxy votes to Official Vote Entitlements; and 
  5. Establishing communication between meeting tabulators and intermediaries about whether proxy votes are accepted, rejected or pro-rated.


Computershare continues to take an active role in the Proxy Working Group that was set up by the Canadian Securities Administrators after the publication of CSA Staff Notice 54-303. These working group meetings have been on-going, however there have not, to date, been any specific rule changes as a result of the meetings and reviews.

End-to-End Vote Confirmation

One of the topics identified in CSA Staff Notice 54-303 was the following:

  • Establishing communication between meeting tabulators and intermediaries about whether proxy votes are accepted, rejected or pro-rated.

The concept of end-to-end vote confirmation is one that has been under review and discussion in various regions for some time now, and Computershare published a discussion paper on the topic in January of 2015, which can be accessed here. Given the opaque nature of securityholder record keeping in Canada there are some challenges to be overcome in connection with an efficient and effective end-to-end vote conformation process. Although a pilot project has not yet been started in Canada, the topic continues to be reviewed and assessed.
Proxy Protocol and the Universal Proxy
The Securities Transfer Association of Canada (STAC) has recently published an amended and updated edition of Proxy Protocol. The January 2016 version, in both English and French, along with a document outlining the updates, has been posted to the STAC website at www.STAC.ca. The revised Proxy Protocol will be used by Computershare for all upcoming securityholder meetings. If you have any questions about this, please contact your Relationship Manager directly.

Computershare, as an active member of STAC, works with the other members in ensuring that Proxy Protocol is regularly reviewed and updated as changes occur in the industry. The overarching presumption of Proxy Protocol is that the tabulator should give effect to the securityholder's intentions, wherever possible, and that continues to be our focus as updates are made.

One of the main updates to Proxy Protocol is the addition of guidelines in connection with the use of a universal proxy. There have recently been various proposals, recommendations and articles about the mandatory use of the universal proxy in all contested director elections. In September, 2015, the Canadian Coalition for Good Governance (CCGG) published a "Universal Proxy Policy" encouraging the use of this type of proxy in any contested shareholder meeting1. The Council of Institutional Investors in the United States has also recommended this step2 and the US Securities and Exchange Commission have indicated that staff is looking at appropriate rule-making3. 

A universal proxy is a form of proxy that lists all nominees for board positions, whether they are nominated by management or other parties, with the view that a shareholder voting by proxy should have the opportunity to vote for nominees from each slate, the same as a shareholder voting in person at the meeting, by ballot. This results in a proxy that contains more nominees than there are board positions available. The use of a universal proxy requires careful review of the instructions provided to shareholders, as well as the voting recommendations, to ensure that the shareholder understands how to execute the form to relay their intentions, and that votes are not inadvertently invalidated or open to misinterpretation.
Proxy Access

Proxy Access has been a hot topic in the United States over the last few months, as issuers implement this optional rule. Proxy Access is the concept that shareholders should have the ability to nominate directors and have them appear on management's proxy. The Canadian Coalition for Good Governance published a policy in May of 2015, entitled Enhanced Engagement and Proxy Access, recommending that issuers allow shareholders "…to have meaningful input into the director nomination process, …"4

There are currently processes in Canada to allow for shareholders to put forth resolutions and nominations, even without a proxy access rule being implemented. A shareholder can nominate a director from the floor at a shareholder meeting, provided they ensure they have met any requirements in the issuer's by-laws, such as an advance notice policy. There are also provisions under certain Acts of Incorporation that allow for holders to include nominees on the proxy, or requisition an entire shareholder meeting. 

Proxy access is not currently a requirement in Canada, however we are watching the developments in the United States as institutional shareholders continue to advocate for this rule.

Election of Directors and Majority Voting

On June 30, 2014, changes to the Toronto Stock Exchange Company Manual mandating majority voting were effective. The amendments require directors to be elected individually, as opposed to via the traditional plurality system, and by a majority of the votes cast. This is in effect for all meetings with the exception of contested meetings, or for listed issuers that are majority controlled. Full details of the requirements can be located in Section 461 of the TSX Company Manual. For TSXv listed issuers, there is no requirement for majority voting, however section 19.6 of Policy 3.1, Entrenchment of Management, states:

"Issuers must not construct mechanisms that entrench existing management such as staggered elections of the board of Directors or the election of a slate of Directors if securityholders are not permitted to choose whether to elect the board as a slate (i.e., as a group in its entirety) or to elect Directors individually."5

The Canadian Coalition for Good Governance has also published a Majority Voting Policy, which can be accessed here. 

Board Diversity

December 31, 2014, amendments were implemented to National Instrument 58-101 Disclosure of Corporate Governance Practices ("NI 58-101") by the Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Québec, Saskatchewan, and Yukon securities regulatory authorities.  These amendments require non-venture issuers to annually disclose the following:

  1. The number and percentage of women on the issuer's board of directors and in executive officer positions;
  2. Director term limits or other mechanisms of board renewal;
  3. Policies relating to the identification and nomination of women directors;
  4. Consideration of the representation of women in the director identification and nomination process and in executive officer appointments; and
  5. Targets for women on board and in executive officer positions.

A comply or explain approach has been used, so if the above are not implemented, the issuer must provide their reasoning.

A review of issuer compliance with NI 58-101 was published on September 28, 2015, and can be accessed here. 


1CCGG Policy "Universal Proxy Policy" September 2015 - http://www.ccgg.ca/site/ccgg/assets/pdf/ccgg_universal_proxy_policy.pdf

2Council of Institutional Investors "Universal Proxy" - http://www.cii.org/cii_universal_proxy

3Mary Jo White, "Building Meaningful Communication and Engagement with Shareholders", speech,  Society of Corporate Secretaries and Governance Professionals 69th National Conference, June 25, 2015- https://www.sec.gov/news/speech/building-meaningful-communication-and-engagement-with-shareholde.html

4CCGG Policy "Shareholder Involvement in the Director Nomination Process: Enhanced Engagement and Proxy Access" May 2015 http://www.ccgg.ca/site/ccgg/assets/pdf/proxy_access_finalv.35.docx_edited_on_june_18,_2015.pdf

5TSX Venture Exchange Corporate Finance Manual, July 13, 2015; Policy 3.1, Section 19.6 https://www.tsx.com/listings/tsx-and-tsxv-issuer-resources/tsx-venture-exchange-issuer-resources/tsx-venture-exchange-corporate-finance-manual/tsxv-corporate-finance-manual-policies