CSA announces new exemption from proxy requirements for uncontested director elections

The Canadian Securities Administrators (CSA) has recently published an exemption for reporting issuers incorporated under the Canada Business Corporations Act (CBCA) from the form of proxy requirement for the uncontested director elections.

As the council of securities regulators of Canada’s provinces and territories, the CSA coordinates and harmonizes regulation for the Canadian capital markets. The CSA chair and Alberta Securities Commission chief executive Stan Magidson explained that the exemption would address confusion in the recent amendments to the CBCA.

The amendments to the CBCA came into effect in August last year. They generally required “majority voting” for each candidate nominated for director in uncontested director elections of CBCA-incorporated reporting issuers. Where majority voting applies, CBCA requires the proxy form to provide shareholders with the option of specifying whether their vote is to be cast “for” or “against” each candidate nominated for director, rather than “voted” or “withheld” from voting as required by s. 9.4(6) of NI 51-102 Continuous Disclosure Obligations.

“The exemption aims to clarify applicable rules by exempting CBCA-incorporated reporting issuers from the requirement under securities legislation to specify that securities be ‘voted’ or ‘withheld’ from voting in the form of proxy for the uncontested election of directors where these issuers comply with the applicable requirements under the CBCA and associated regulations,” Magidson said.

The CSA has implemented the relief through local blanket orders that are substantively harmonized nationwide. The blanket orders exempt CBCA-incorporated reporting issuers from the director election form of proxy requirement for uncontested election of directors. These local blanket orders are found on CSA members’ websites.

The CSA published the recent exemption on January 31. It is considering whether future proposed amendments to subsection 9.4(6) of NI 51-102 are appropriate. Further, the CSA said it would adopt any amendments through the normal rule-making procedures on a coordinated basis.