Summer Days Gone By

As we leave the hot summer days behind and brace for cooler temperatures, it is time to get back into the usual fall routine. While the summer was great, it was the busiest one we have had at CIRI. The reason for this was non-routine items – primarily preparing for the transition to Canada’s new Not-for-Profit Corporations Act (which CIRI Chair George Kesteven touched on in his column), reviewing proposed changes to reporting requirements and writing submissions.

Earlier this year, the Canadian Securities Administrators (CSA) sought comment on proposed changes to the Early Warning System, a topic near and dear to our members’ hearts. The CSA proposed:

• lowering the beneficial ownership threshold under the Early Warning System to 5% from 10%;
• including equity equivalent derivatives and securities lending positions in the Early Waning System calculation;
• requiring beneficial owners to disclose if there are subsequent 2% incremental increases, as well as decreases in their share ownership;
• requiring disclosure of share ownership when shareholders fall below the Early Warning System; and
• requiring that these disclosures be made before trading hours commence on the following business day.

In our submission, CIRI was supportive of all of the above proposed changes, with a caveat – that beneficial owners disclose subsequent incremental increases and decreases in share ownership of 1%.

As you would expect, many stakeholders made submissions on the CSA proposals. Some supported the changes while others were opposed. We will continue our dialogue with the regulators and inform you of any developments.

I would like to personally thank CIRI members who submitted letters of support for our recommendations and I encourage everyone to take up the charge when the opportunity next presents itself.

Relevant Links:

CSA Notice & Request for Comment: National Instrument 62-103 Early Warning System & Related Take-over Bid & Insider Reporting Issues

CIRI’s Submission on the Early Warning System

During the summer, we also reviewed and commented on the Integrated Reporting Framework (known as the <IR> Framework) put forward by the International Integrated Reporting Council (IIRC). The <IR> Framework outlines what the IIRC feels an integrated report should be: a communication about how an organization’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value over the short, medium and long term. While many of the concepts, principles and content are already captured within Canadian reporting requirements, CIRI feels there are areas of the <IR> Framework that could enhance disclosure.

Relevant Links:

IIRC Proposed <IR> Framework

CIRI’s Submission on the Proposed <IR> Framework

What Lies Ahead for Fall

Two current requests for comment may be of interest to you. The first is OSC Consultation Paper 58-401 – Disclosure Requirements Regarding Women on Boards and in Senior Management due September 27 and the second is CSA Consultation Paper 54-401 – Review of Proxy Voting Infrastructure, with a deadline of November 13. CIRI will make submissions on both of these Papers.

Relevant Links:

OSC Consultation Paper 58-401 – Disclosure Requirements Regarding Women on Boards and in Senior Management

CSA Consultation Paper 54-401 – Review of Proxy Voting Infrastructure

We encourage you to provide your views on these Papers; please participate in our surveys or give me a call. By coming together to voice issuer concerns and perspectives to the regulators, we can affect change.