The Canadian Securities Administrators (the "CSA") has recently issued Staff Notice 58-305 – "Status Report on the Proposed Changes to the Corporate Governance Regime" (the "Notice"). The Notice outlined the CSA's reasons for deciding not to implement significant changes to the corporate governance regime in Canada.
Proposed Amendments
On December 19, 2008, the CSA sought comments on proposed amendments to its corporate governance and audit committee regimes. The proposed regimes would have introduced changes in three main areas:
- National Policy 58-201 Corporate Governance Principles would have been a more principles-based policy that was broader in scope than the current policy;
- More general disclosure requirements would have replaced the existing "comply or explain" disclosure model set out in National Instrument 58-101 Disclosure of Corporate Governance Practices; and
- A principles-based approach to determining director and audit committee member independence would have replaced the current approach in National Instrument 52-110 Audit Committees.
In the initial proposal, Jean St-Gelais, Chair of the CSA and President & Chief Executive Officer of the Autorité des marchés financiers noted that the proposed governance regime was "intended to provide greater transparency for the marketplace regarding issuers' corporate governance practices and to provide guidance to issuers."
Comments Received
The CSA received numerous comments addressing the timing of the proposed changes. The CSA reported that the commentators noted that issuers are presently focused on dealing with the financial crisis and on the transition to International Financial Reporting Standards.
Reasons for not Implementing the Proposal
Based on these comments, the CSA has decided to not implement the proposed changes. The CSA noted that "now is not an appropriate time to recommend significant changes to the corporate governance regime" and it is reconsidering whether to recommend any changes.
The CSA stated that any further proposed changes will be published for comment and will not take effect until the 2011 proxy season at the earliest.
If there are any revisions to the corporate governance regime, issuers will be provided with sufficient notice to comply.
For more information on the subject of this bulletin, please contact the author or any member of Fasken Martineau's Securities and Mergers & Acquisitions Group.
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