ICD Submits Recommendations to CSA Regarding Guidance for Proxy Advisory Firms

Jun 24, 2014
The Institute of Corporate Directors (the “ICD”) today announced that it has submitted a comment letter to the Canadian Securities Administrators (CSA) regarding Proposed National Policy 25-201 Guidance for Proxy Advisory Firms (the “Proposed Policy”). The Proposed Policy was published by the CSA on April 24, 2014 to address certain concerns raised by market participants about the services provided by proxy advisory firms and their potential impact on Canadian capital markets.
“The increasing influence of proxy advisory firms on corporate governance practices is of great importance to directors in Canada, and our members encourage the CSA to take further steps to alleviate the tensions we are currently experiencing regarding the roles and responsibilities of these organizations,” said ICD President and CEO Stan Magidson.
In addition to the guidance provided by the CSA in the Proposed Policy, ICD proposes three further recommendations in areas where it feels guidance alone will not address the concerns held by many capital market participants regarding proxy advisory firms, including issues of conflicts of interest, standards of training and experience, and dialogue with issuers.
  • Conflict of Interest. ICD believes proxy advisory firms should be precluded from issuing a voting recommendation on a particular matter where that firm has provided consulting services to the issuer or the firm’s investor-client or owner has a material interest.
  • Standards of Training and Experience. The industry should be committed to a minimum-level of training for analysts and be required to disclose this training.
  • Dialogue with Issuers. Proxy advisory firms should be required to discuss contrary recommendations with the issuer in advance of a report’s completion and provide sufficient time for the issuer to include a response in the materials that are provided to the proxy advisory firm’s clients.
“We commend the CSA for addressing this important issue and, on behalf of our 8700 members across Canada, we welcome the opportunity to contribute to finding solutions that are in the best interests of all capital markets participants,” added Mr. Magidson.
The full ICD comment letter can be viewed at: www.icd.ca/policy