TORONTO, Nov. 14, 2013 /CNW/ - The Canadian Investor Relations Institute (CIRI) submitted recommendations to the Canadian Securities Administrators (CSA) to regulate proxy voting processes so that all stakeholders have confidence that the system is transparent, reliable and efficient, which in turn would garner greater confidence and integrity in the Canadian capital markets.
Accurate and transparent shareholder voting is fundamental to the quality and integrity of the capital markets. Issuers put forward important proposals for shareholders to vote on and both parties rely on the proxy voting system to ensure that those shareholder votes are collected and counted accurately and efficiently.
CIRI's submission illustrates that Canada's proxy voting infrastructure is too complex, involving multiple stakeholders using different systems and databases. This complexity, coupled with the tight timeframes surrounding annual meetings, make the proxy vote susceptible to errors. With regulatory intervention there would be greater transparency, which would contribute to greater certainty in the quality of the shareholder vote.
In the submission, CIRI recommends that the CSA:
- Institute appropriate regulation of the proxy voting infrastructure processes including vote reconciliation and end-to-end vote confirmation.
- In cases of share lending, ensure that the voting power resides with the shareholder who has the economic interest in those shares.
- Conduct further research into the impact the OBO-NOBO concept has on the transparency and integrity of the proxy voting infrastructure. Consideration should be given to making NOBO the default option when establishing brokerage customer accounts and that shareholders with OBO status be subject to an additional fee.
"Given the importance of the shareholder vote it is imperative that the vote reconciliation process work efficiently and accurately and that end-to-end vote confirmation be implemented. We feel this requires regulatory oversight given that there are so many stakeholders and systems involved," said Yvette Lokker, President & CEO, CIRI. "The complexity is compounded by the recent upsurge in stock lending activities by market participants and inconsistent practices around who holds the right to vote those loaned shares. We believe the investor who has the economic interest in the shares should be the one voting those shares."
CIRI's recommendations, filed on November 13, 2013, are in response to the CSA Consultation Paper 54-401: Review of the Proxy Voting Infrastructure published in August 2013.
CIRI is a professional, not-for-profit association of executives responsible for communication between public corporations, investors and the financial community. CIRI contributes to the transparency and integrity of the Canadian capital market by advancing the practice of investor relations, the professional competency of its members and the stature of the profession. With close to 600 members and four chapters across the country, CIRI is the voice of IR in Canada. For further information, please visit CIRI.org.
SOURCE: Canadian Investor Relations Institute
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President & CEO
Canadian Investor Relations Institute (CIRI)