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should be sent by October 27, 2000 to Jean-Francois Bernier, attorney, Director of Capital Markets (jean-francois.bernier@cvmq.com)
New Shareholder Communication Rules
As a result of the consideration of submissions received from a broad range of commentators on the previous draft of the proposed National Instrument 54-101 respecting Communication with Beneficial Owners of Securities of a Reporting Issuer, the OSC is republishing the proposed National Instrument for a third comment period. The substance and purpose of the proposed National Instrument, its corresponding Forms and Companion Policy are to establish an obligation on reporting issuers to send proxy-related materials to the beneficial owners of its securities who are not registered holders, to provide a procedure for meeting this obligation and to impose obligations on various parties in the securityholder communication process. Fairvest submitted a comment letter on NI 54-101 in June of 1998.
The proposed changes include a reduction from 35 days to 30 days of the minimum time between the record date for notice of a shareholders meeting and the meeting date. The change has been made to facilitate the calling of meetings on a more expedited basis and to conform more closely to timing requirements for mailings to registered holders under corporate law. The latest draft specifies that notification of a meeting must be given at least 25 days before the record date for notice. The previous draft was silent on this timing issue. A mechanism is provided to shorten this time period if other requirements are satisfied in that shorter time period. This change is a response to comments expressing concern that the omission of time periods currently in effect would lead to reporting issuers not allowing sufficient time to ensure that all the requirements of NI 54-101 would be satisfied before a meeting date. The proposed Instrument reinstates the time periods |
contained in National Policy 41 currently in effect that deals with shareholder communications, but allows for the abridgment of them if the reporting issuer complies with certain requirements. The issuer must file with the regulator at the time it files its proxy-related material a certificate of one of its officers, reporting that it is relying upon the relevant section of NP 54-101 and that it has arranged to have proxy-related materials for the meeting sent in compliance with the National Instrument to all beneficial owners at least 21 days before the date fixed for the meeting, and has carried out all of the other requirements of the proposed National Instrument. This could be a concern for investors, who may require more time to evaluate a complicated proposal than the 21 day window provides. Similarly, the NI 54-101 reinstates the requirement than issuers send requests for beneficial ownership information to intermediaries at least 20 days before the record date for notice of a meeting when the previous draft was silent with respect to this timing issue.
A request for beneficial ownership information must now be made through a transfer agent, to ensure that intermediaries need deal with only a limited number of entitles with respect to requests for beneficial ownership information. NI 54-101 has been amended to specifically provide that proxy materials sent to beneficial owners must explain, in plain language, the right of the beneficial owner to attend and vote the securities directly at a meeting and a description of how those rights may be exercised. Also new, a beneficial owner that receives proxy-related material directly from an issuer may, as an alternative to providing voting instructions, request and receive a legal proxy and exercise their right to vote at the meeting. The legal proxy ensures that such persons who attend a meeting have the legal authority to vote the securities that they beneficially own and to change any voting instructions previously given. |