CSA provides an update on its approach to determining director and audit committee member independence
Jul 26, 2018
On July 26, 2018, the Canadian Securities Administrators (CSA) published CSA Staff Notice 52-330, Update on CSA Consultation Paper 52-404 Approach to Director and Audit Committee Member Independence. The notice summarizes feedback received during the CSA’s consultation on the approach to determining director and audit committee member independence, and outlines the CSA’s rationale for maintaining the current approach.
Considering the realities of the Canadian market and the comments received, the CSA have concluded that it is appropriate to maintain its current approach to determining director and audit committee member independence. It recognizes that its current approach has benefits and limitations. Upon review, it is satisfied that it strikes an appropriate balance between affording sufficient discretion to the board of directors to determine whether an individual could reasonably be expected to exercise independent judgement, and providing prescriptive elements that preclude an individual from being considered independent in certain circumstances.
The CSA’s current approach has been in place since 2004 and it notes that stakeholders understand and have adapted accordingly. Making changes to the current approach or replacing it with an alternative approach could result in additional costs for issuers and efforts for investors to adapt to such changes. The CSA is of the view that, in this case, any potential benefits of a change to the approach are outweighed by the potential negative impact of implementing such a change.
Review the press release on the CSA's website and the Staff Notice on the CSA members’ websites.
