The Canadian Securities Administrators (CSA) have published
Staff Notice 54-304, which sets out proposed operational protocols
designed to enhance the accuracy, reliability and accountability of
proxy voting in Canada. The protocols contain a number of
recommendations to various participants in the proxy voting process
for improving existing systems and processes.
The CSA have been examining Canada's proxy voting
infrastructure since 2013. This review involved an extensive
consultation process as well as a detailed review of proxy voting
at six shareholder meetings. The proposed protocols represent the
CSAs' first attempt to address a number of the problems
identified in their review.
The protocols outline the CSAs' views on appropriate roles
and responsibilities of a number of the key participants in the
proxy voting process - including CDS, intermediaries, Broadridge
and transfer agents (in their capacities as vote tabulators) - as
well as operational processes these participants should adopt.
The protocols are primarily aimed at ensuring that:
vote tabulators receive the
information they require to accurately establish the voting
entitlements of intermediaries such as custodians and investment
vote tabulators and intermediaries
establish standard communication channels to facilitate the
exchange and confirmation of information relating to voting
entitlements and any potential problems relating to proxies that
are submitted to the tabulator.
Many of the protocols are fairly technical in nature and address
detailed operational matters such as how intermediaries should use
supplemental omnibus proxies to transfer voting entitlements to
each other. The CSA believe that the protocols also lay the
foundation for more significant improvements in the proxy voting
process, such as moving to an entirely electronic system (i.e.,
eliminating paper proxies) and developing "end-to-end"
confirmation capabilities that would allow beneficial shareholders
to verify that their shares have been voted in accordance with
The CSA are requesting comments on the draft protocols until
July 15, 2016 with a view to publishing final protocols by the end
of the year. The extent of voluntary adoption of the protocols in
2017 would then be monitored. The CSA also intend to establish a
technical committee to continue examining ways that the proxy
voting system can be improved.
The protocols are an important first step in attempting to
address, in a systematic way, a number of the most pressing issues
with proxy voting in Canada such as over-voting, missing votes and
shareholders' inability to confirm whether their shares have
been voted in accordance with their instructions. While many of the
protocols seem entirely sensible and uncontroversial, their impact
may be limited; the protocols are not mandatory and require the
cooperation of a number of market participants having different
perspectives on the utility of the protocols and how to best
More importantly, the protocols are limited to addressing
perceived operational problems within the existing proxy voting
infrastructure. They do not address any of the larger structural
issues, such as the multiple layers of separation between
beneficial shareholders and issuers, that give rise to many of the
concerns that the CSA are trying to address. These are much bigger
problems and the relatively modest scope of the CSAs' initial
proposal perhaps indicates how difficult they are to address.
The content of this article does not constitute legal advice
and should not be relied on in that way. Specific 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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