Canada's securities regulators have released for comment
proposed National Policy 25-201 - Guidance for Proxy Advisory
Firms. The proposed policy is a follow-up to the
regulators' 2012 concept paper and is meant to address concerns
expressed by public companies and other market participants about
potential conflicts of interest and a perceived lack of
transparency in the work of proxy advisory firms, whose advice may
influence the outcome of shareholder votes. The proposed policy
provides recommended practices but does not impose any mandatory
requirements on proxy advisory firms. The deadline for providing
comments to the Canadian securities regulators is June 23,
Proxy advisory firms have also been under scrutiny in the United
States. The SEC issued a concept paper on the U.S. proxy voting
system in 2010 and hosted a public roundtable on proxy advisory
services at the end of 2013. Further regulatory action is expected,
but it is difficult to predict whether the SEC's approach will
be more prescriptive than Canada's. Below are highlights of the
key recommendations set forth in the proposed Canadian policy.
Proxy advisory firms should maintain internal policies and
procedures to identify and mitigate conflicts of interest. This may
include developing a code of conduct applicable to employees and
appointing a qualified officer responsible for compliance who
reports to the firm's leadership. Actual or potential conflicts
of interest should be communicated to clients in a timely
Policies and procedures for engaging in dialogue with issuers
and for developing proxy voting guidelines should be publicly
disclosed, to the extent possible without compromising commercially
sensitive information. Since proxy voting guidelines may influence
issuers' corporate governance practices, proxy advisory firms
should regularly consult with their clients, market participants
and the public.
Vote recommendations should be determined in a transparent and
consistent manner using methodologies aimed at reducing the risk of
factual errors. This may include implementing a formal quality
assurance program. Factual inaccuracies should be corrected in a
In their reports to clients, proxy advisory firms should
disclose the methodology used, the relevant factors, the weight of
each factor and any deviation from proxy voting guidelines. They
should also explain to clients any limitations or conditions on the
research or analysis underlying the vote recommendation.
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.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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