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2019

Adopting a smarter cybersecurity strategy

Apr 25, 2019

On April 25, 2019, the National Association of Corporate Directors (NACD) published a blog on enterprise cybersecurity. Cybersecurity was once considered an information technology (IT) function and a challenge for the IT team, but it’s safe to say that most directors of companies understand that much has changed in the past decade.

Today, cybersecurity is a strategic business imperative—boards and senior executives are actively involved in cybersecurity strategy because it has become a closely entwined part of enterprise risk management. Enterprises are increasingly digital, and decisions made at the board and C-suite level will ultimately have tremendous influence over an enterprise’s future business success or failure.

Review the full blog on the NACD's website.

AICPA Survey: Business Executives Say Complex Financial Instruments Continue to Pose Risk

Jul 02, 2019

On July 2, 2019, the Amer­i­can In­sti­tute of CPA’s (AICPA) released the results of a recent survey which indicates that financial instruments are a growing presence on company balance sheets, and business executives say more market awareness is needed to prevent another financial crisis.

When asked about their company financial statements, 59 percent of the CPAs surveyed reported having complex financial instruments such as mortgage-backed securities, interest rate swaps or other derivatives on their company balance sheets. 

Of those respondents with complex financial instruments on their books:

  • 69 percent expect financial instruments to become more complex (57 percent slightly more complex, 12 percent substantially more complex) over the next one to three years, compared with 1 percent who expect them to decrease in complexity.
  • 53 percent believe there is not enough market awareness of complex financial instruments to prevent a financial crisis, compared with only 22 percent who believe there is adequate awareness.
  • 55 percent said they are concerned about the valuation of derivatives with 6 percent reporting significant concern and 49 percent reporting slight or moderate concern.
  • 56 percent said it would be easier to determine the value of complex financial instruments if they were measured and reported on a consistent and transparent basis.

Complex financial instruments historically have been difficult to value. That difficulty is seen as a major cause of the financial crisis that lead to the recession of 2008. The derivatives market exceeded $594 trillion in 2018. More than a quarter (28 percent) of respondents said they expect financial instruments to take a larger percentage of their balance sheets over the next one to three years, while only 15 percent see that decreasing.

For more in­for­ma­tion, see the press release on the AICPA’s Web site.

ASC consults on energizing Alberta’s capital market

Jun 27, 2019

On June 27, 2019, the Al­berta Se­cu­ri­ties Com­mis­sion (ASC) published ASC Consultation Paper 11-701, Energizing Alberta’s Capital Market. This consultation is seeking input on steps the ASC can take to foster a vibrant public and private capital market in Alberta while protecting investors.

The Consultation Paper summarizes research and input from preliminary consultations held to date, which were undertaken to help the ASC better understand the changes occurring in the Alberta capital market and the challenges being faced. It also includes a number of preliminary ideas designed to elicit feedback from market participants on enhancements that can be made and red tape that can be reduced. Comments and feedback should be submitted by September 20, 2019.

For further details of this initiative, refer to the press release on the ASC’s website.

Caremark duties include duty not only to establish oversight processes but also to monitor them

Oct 07, 2019

On October 7, 2019, the D&O diary published an article on the October 1, 2019 decision in the Clovis Oncology Derivative Litigation. In the decision, the Delaware Chancery Court provided further perspective on directors’ potential liability for breaches of the duty of oversight.

Boards not only must be able to show that they have made good faith efforts to implement an oversight system, but that also that they monitor the system – particularly when a company operates in a highly regulated industry.

Review the full article on the D&O diary's website.

CBCA corporations must begin tracking controlling shareholders

Jan 21, 2019

On January 21, 2019, Torys LLP published an article on how CBCA corporations will soon have to establish a securities register detailing all individuals with significant control over the corporation.

The new regulations under Bill C-86 Budget Implementation Act, 2018, No. 2 become effective on June 13, 2019. Existing record-keeping obligations under the CBCA pertain to registered shareholders only—those named on the corporation’s share certificates, who are often intermediaries holding shares on behalf of beneficial shareholders. The new share register requirements pertain to all individual shareholders, registered or beneficial, who have significant control, direct or indirect, over the corporation.

Review the full article on Torys LLP's website.

Change the conversation: Redefining how companies engage investors on sustainability

Feb 06, 2019

On February 6, 2019, Ceres, a sustainability nonprofit organization, released the report "Change the Conversation". Drawing from their interviews with Ceres investor partners, the report highlights key trends in investors’ evolving expectations for corporate sustainability.

It presents nine recommendations to guide companies toward more meaningful and effective investor engagement on ESG issues, helping them to not only meet investor expectations, but also capture competitive advantage.

Review the report on Ceres' website.

Consultation document released on tax challenges of digitalization

Feb 13, 2019

On February 13, 2019, as part of the ongoing work of the OECD/G20 inclusive framework for the global implementation of the BEPS project, the Organisation for Economic Co-operation and Development (OECD) released a consultation document "Addressing the Tax Challenges of the Digitalization of the Economy." Comments are requested by March 1, 2019.

The consultation document sets out four proposals under consideration by the members of the inclusive framework as they work towards reaching a new consensus-based long-term solution in 2020. Options under consideration are:

  • Three proposals to revise existing profit allocation and nexus rules based on the concepts of (i) "user participation," (ii) "marketing intangibles" and (iii) "significant economic presence;" and
  • A global anti-base erosion proposal comprising income inclusion and denial of deduction rules to permit countries to tax profits where income is subject to no or very low taxation.

The consultation document makes clear that countries have agreed to look at a range of proposals on a "without prejudice" basis to allow for necessary further work without commitment at this stage to a particular course of action.

Review a summary and the consultation paper consultation paper on the OECD's website.

Dr. Stavros Thomadakis reappointed as IESBA Chairman

Jul 25, 2019

On July 25, 2019, the International Ethics Standards Board for Accountants (IESBA) announced the reappointment of Dr. Stavros Thomadakis as IESBA Chairman for a further one-year renewable term commencing January 1, 2020, which was recently approved by the Public Interest Oversight Board (PIOB).

Dr. Thomadakis has chaired the IESBA since 2015. His dedication to high quality, fit-for-purpose ethics standards for the global accountancy profession is reflected in the IESBA’s ambitious Strategy and Work Plan 2019–2023.

ESG risks trickle into financial filings

Oct 21, 2019

On October 21, 2019, the NACD BoardTalk released a blog on how investors in 2019 have increasingly turned their attention to environmental, social, and governance (ESG) topics, and are demanding more information on how companies are thinking about the potential long-term risk and opportunities related to specific environmental and social factors.

As companies prepare for the 2020 proxy season and engage with shareholders, directors should understand the current state of ESG risk reporting in public filings.

Review the full blog on the NACD BoardTalk's website.

Gender equality is within our reach

Sep 30, 2019

In September 2019, the Harvard Business Review published an article by Melinda Gates, where she discusses that even though American women did reach that 50% threshold in 2010 (and currently comprise 49.8% of the nonfarm workforce), the same old inequalities have simply followed women to new places. Women still aren’t earning as much, rising as high, or having an equal voice in decision-making.

Across all aspects of American life, it is most often men who set policy, allocate resources, lead companies, shape markets, and determine whose stories get told. Meanwhile, what gains have been made typically haven’t extended to all women. The women historically the most marginalized in this country — including women of color, poor women, and lesbian and trans women — are still the most likely to be trapped in minimum-wage jobs, the least likely to hold managerial roles, and the most likely to face sexual harassment and gender-based violence.

Review the full article on the Harvard Business Review's website.

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