On March 31, 2016, the Canadian Securities Administrators (the
"CSA") published for comment proposed
protocols with respect to proxy vote reconciliation for shares
beneficially owned by shareholders who hold those shares through
intermediaries (the "Protocols"). The
comment period for the Protocols closes on July 15, 2016.
The Protocols are the CSA's response to gaps in the existing
vote reconciliation process identified by the CSA in its previous
review of the proxy voting infrastructure in Canada, which
commenced in 2013. They set out CSA staff expectations on the role
and responsibilities of the "key entities" that implement
shareholder meeting vote reconciliation (including tabulators,
intermediaries and Broadridge). The CSA states that the Protocols
are intended to apply to uncontested meetings. However, the CSA
also states that some of the expectations and guidance set out in
the Protocols "are also relevant to meeting vote
reconciliation for proxy contests and should be taken into account
The Protocols' guidance includes:
responsibility for implementing appropriate processes to ensure
that they are providing accurate and complete voting entitlement
information on the supplemental and restricted proxies provided by
them to the tabulator;
responsibility for obtaining the omnibus proxy from CDS & Co.
and taking active reasonable steps to advise intermediaries and
Broadridge in the event an intermediary is in an
"over-vote" position where it is attempting to vote more
shares than the tabulator believes that intermediary is entitled to
for obtaining the omnibus proxy from CEDE & Co. for beneficial
owners holding through U.S. intermediaries and providing this
omnibus proxy to the tabulator;
Timeframes within which the
tabulator is expected to respond to requests from intermediaries
for confirmation that votes have been received, suggesting that
intermediaries should avoid voting at the 'last minute' to
leave time to correct any issues identified by the tabulator;
Communication that is
expected to occur between the tabulator, Broadridge and
intermediaries, including to support confirmation that votes
submitted to the tabulator have been received and in connection
with the notifications expected to be provided by the tabulator
with respect to any votes received by the tabulator that are
rejected or pro-rated.
The CSA's plans for implementing and assessing the success
of the Protocols include:
Establishing a technical committee to
support and monitor the implementation of improvements to the vote
Holding at least one roundtable in
late 2016 with market participants to discuss comments received on
Publishing the final Protocols by the
end of 2016 in time for the 2017 proxy season; and
Monitoring the voluntary
implementation of the Protocols and related industry initiatives
during the 2017 proxy season and assessing the need for new rules
and guidance at that time.
The CSA states that, going forward, the Protocols are intended
to "lay the foundation" for tabulators, intermediaries
and Broadridge to work collectively to (a) move to electronic
(rather than paper) transmission of information; and (b) develop an
"end-to-end" vote confirmation system that will allow
beneficial owners to confirm that their proxy votes have been
accepted. The CSA also states that it intends to "strongly
encourage and monitor" initiatives in these areas.
A complete copy of the Protocols is available here.
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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