The move towards eliminating the amount of paper involved in shareholder meetings of Canadian public companies has begun. Canadian issuers may use the new "notice-and-access" regime adopted by the Canadian Securities Administrators (the "CSA") for meetings that take place on or after March 1, 2013 (provided this method of delivering proxy-related materials is permitted by the issuer's governing statute). In a nutshell, issuers will be able to send to shareholders (both registered and beneficial holders of the issuers), a much reduced package of materials, together with the document required to cast their vote. These materials will direct shareholders to a website where they may access the complete proxy circular. In other words, the shareholders get "notice" of the meeting, together with a brief summary of the business of the meeting and will be advised how they may "access" the proxy circular. The notice-and-access regime is set out in the amendments to the CSA's National Instrument 54-101 (Communication with Beneficial Owners of Securities of a Reporting Issuer).
Highlights of the notice-and-access regime include the provisions set out below:
- Issuers are not required to use notice-and-access. It is entirely optional. Notice-and-access is not available to investment funds.
- The first time an issuer uses notice-and-access, it must file a notification on SEDAR at least 25 days before the record date for notice. In subsequent years, this notice need only be filed three business days before the record date.
- The record date for the meeting must be at least 40 days before the meeting. Under the paper based system, the record date can be as little as 30 days before the meeting. The CSA believes that at least 40 days is required under notice-and-access to provide sufficient time for the website posting and delivery requirements.
- The issuer must send to shareholders a notice package that
contains a proxy or voting instruction form as well as a notice
that sets out:
- basic information about the meeting and the matters to be voted on;
- how to obtain a paper copy of the information circular (and if applicable, annual financial statements and annual management discussion and analysis (MD&A)); and
- a plain language explanation of the notice-and-access process.
- The notice package must also be posted on SEDAR and on another website (such as the issuer's website) and remain posted there for one year.
- The issuer must post the information circular and related materials on a website other than SEDAR (such as the issuer's website).
- With the exception of the notice and relevant voting package, issuers are generally prohibited from including other material in the notice package. However, issuers may use notice-and-access to deliver their annual financial statements and annual MD&A.
- Dissidents may also use the notice-and-access regime.
- Enhanced disclosure of the proxy voting process in the
information circular sets out:
- whether the issuer is using notice-and-access (and whether the issuer will send paper copies of the information circular to certain shareholders notwithstanding its use of notice-and-access);
- whether the issuer is sending proxy-related materials directly to its NOBOs (non objecting beneficial owners); and
- if the issuer does not intend to pay for intermediaries to deliver proxy-related materials to OBOs (objecting beneficial owners), state that the OBO may not receive proxy-related materials unless the OBO's intermediary assumes the cost of delivery.
The amendments to NI 54-101 include a number of other changes to the communication process between issuers and their shareholders. The CSA is continuing its review of the proxy voting system and is expected to announce further initiatives early in 2013. For more information on the proxy voting system in Canada see www.shareholdervoting.com.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
