The role of proxy advisory firms in the marketplace has been a
focal point on both sides of the border as recent guidance by the
US Securities and Exchange Commission (SEC) and
the Canadian Securities Administrators (CSA)
highlights the powerful influence of proxy advisory firms and need
for increased accountability and transparency.
In the US, the SEC Staff released a bulletin in June entitled Proxy Voting: Proxy Voting Responsibilities of
Investment Advisers and Availability of Exemptions from the Proxy
Rules for Proxy Advisory Firms (the
Bulletin) which places some onus on the investment
advisor, as part of his or her fiduciary duty to the client, to
ensure that in acting through proxy advisory firms, sufficient
oversight is provided to advance the best interests of the
client. The investment advisor must assess proxy advisory
firms' "capacity and competency to adequately analyze
proxy issues" on an ongoing basis by ensuring that the proxy
advisory firm has current and accurate information as well as the
ability to identify and address any conflicts of interest.
In August, SEC Commissioner Daniel M. Gallagher published a
working paper entitled Outsized Power & Influence: The Role of
Proxy Advisers, contending that the Bulletin did not go
far enough in recognizing that "the investment adviser
industry has become far too entrenched in its reliance on [proxy
advisory] firms". He goes on to suggest a fundamental
review of the role of proxy advisory firms including the
possibility of reforms such as the implementation of a universal
code of conduct, emphasis on increased transparency, appropriate
approaches to dealing with conflicts of interest and an overall
increase in accountability. Commissioner Gallagher clarifies
that the SEC's role would not be to regulate proxy advisory
firms but, rather, to promote best practices.
In Canada, the CSA released for comment a proposed National Policy 25-201 Guidance for Proxy
Advisory Firms (the Policy) in
April. The Policy emphasizes the need to effectively identify
and mitigate conflicts of interest, ensure transparency and
accuracy in vote recommendations, develop proxy voting guidelines
through consultative processes, and promote proper management of
communications with clients, market participants, the media and
public. The comment period for the Policy was closed in July
and it remains to be seen how the CSA will proceed in addressing
the role of proxy advisory firms in the Canadian marketplace.
An in-depth overview of the proposed Policy can be accessed
As the 2015 proxy season approaches, proxy advisory firms,
investment advisors and corporate issuers would be prudent in
assessing their current practices pertaining to proxy advisory
services, taking into consideration the increasing scrutiny with
which such services are being viewed.
Norton Rose Fulbright Canada LLP
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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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