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Amendments to National Instrument 54-101: Proxy Voting Infrastructure [Completed]

Issued: January 26, 2017

Effective date:

Not indicated

Last updated:

January 2017

Overview

The purpose of the project was to facilitate discussions among market participants regarding the integrity and reliability of Canada’s proxy voting infrastructure.  The increase in shareholder engagement over the last few years have imposed greater stress on Canada’s proxy voting system, which is why reviewing the proxy voting infrastructure for shareholders was a priority for the CSA.

The CP identified a number of areas for discussion that the CSA determined may impact the accuracy of the infrastructure. Among other things, the issues raised included:

  1. whether the current infrastructure adequately supports accurate and reliable vote counting, and
  2. whether a vote confirmation system should be introduced so that shareholders can be confident their votes have been transmitted, received and counted at a shareholder meeting.

Following the release of CSA Staff Notice 54-305 Meeting Vote Reconciliation Protocols, the voluntary protocols outline CSA staff expectations related to generating and sending vote entitlement information; setting up vote entitlement accounts; sending proxy vote information and tabulating and recording proxy votes; and informing beneficial owners of any rejected or pro-rated votes.

Recent activities

January 2017

On January 26, 2017, the CSA published CSA Staff Notice 54-305 Meeting Vote Reconciliation Protocols, which outlines CSA staff expectations and guidance for improving the processes involved in the tabulation of proxy votes.

March 2016

On March 31, 2016, the CSA published CSA Multilateral Staff Notice 54-304 Final Report on Review of the Proxy Voting Infrastructure and Request for Comments on Proposed Meeting Vote Reconciliation Protocols. Among other things, the Notice seeks comment on proposed protocols containing CSA staff expectations and guidance for improving the processes involved in the tabulation of proxy votes. The comment period closes July 15, 2016. 

January 2015

On January 29, 2015, the CSA published CSA Staff Notice 54-303, Progress Report on Review of the Proxy Voting Infrastructure, to report on the progress made in their review and to outline next steps.

The review’s findings to date confirm that the current proxy voting infrastructure is fragmented and needs to be modernized and improved. The progress report identifies five improvements that must be made to vote reconciliation:

  1. modernizing how meeting tabulators receive information about who is entitled to vote;
  2. ensuring that the information meeting tabulators receive is accurate and complete;
  3. enabling each intermediary who submits proxy votes on behalf of clients to find out how many shares a meeting tabulator has determined that the intermediary is entitled to vote (its Official Vote Entitlement);
  4. increasing consistency in how meeting tabulators reconcile proxy votes submitted by intermediaries to Official Vote Entitlements; and
  5. establishing communication between meeting tabulators and intermediaries about whether proxy votes are accepted, rejected or pro-rated.

The CSA is directing all entities that play key roles in vote reconciliation to assess their processes and identify and implement any appropriate steps they can take to improve vote reconciliation for the 2015 proxy season. In 2015, the CSA intends to review one or more proxy contests to determine if there are any vote reconciliation issues that are specific to proxy contests. For the 2016 proxy season, the CSA is directing the key entities involved in vote reconciliation to develop industry protocols that, at a minimum, address the five required improvements. The CSA will oversee the development of these protocols and may consider mandating aspects of them or regulating entities in the proxy voting infrastructure as necessary.

August 2013

On August 15, 2013, the CSA published for comment, Consultation Paper 54-401, Review of the Proxy Voting Infrastructure.

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