The Canadian Securities Administrators ("CSA") on
April 24, 2014 published proposed National Policy 25-201
Guidance for Proxy Advisory Firms ("NP 25-201").
The purpose of this Policy is to set out recommended practices for
proxy advisory firms in relation to the services they provide to
their clients and their activities. NP 25-201 provides guidance to
proxy advisory firms designed to
(a) promote transparency in the processes leading to a vote
recommendation and the development of proxy voting guidelines,
(b) foster understanding among market participants about the
activities of proxy advisory firms.
The guidance addresses conflicts of interest, the determination
of vote recommendations, the development of proxy voting guidelines
and communications with clients, market participants, the media and
the public. The guidance in NP 25-201 is not intended to be
prescriptive or exhaustive. In particular, there are extensive
provisions on conflicts of interest which arise when, among other
circumstances, a proxy advisory firm provides vote recommendations
to an investor client on corporate governance matters of an issuer
to which the proxy advisory firm provided consulting services.
The CSA states that it recognizes that proxy voting, which
provides a means for investors and issuers to engage in dialogue
about matters concerning the issuer, is integral in maintaining
confidence in Canadian capital markets.
The CSA also acknowledges that proxy advisory firms play an
important role in the proxy voting process by providing services
that facilitate investor participation in the voting process such
as analyzing proxy materials and providing vote recommendations.
Some proxy advisory firms also provide other types of services to
issuers, including consulting services on corporate governance
The CSA is requesting comments on the proposed Policy. The
comment period is open until June 23, 2014.
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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