As reported by the Canadian law firm Goodmans, the Canadian Securities Administrators have issued a white paper on possible regulation of proxy advisory firms. The white paper notes the same concerns that US companies are frequently airing about the role of proxy advisory firms here. The primary concerns noted by the CSA are:
- Conflicts of interest where the same proxy advisory firm advises both the company and shareholders of the company.
- Lack of transparency resulting in issuers and shareholders being unable to assess the analysis.
- Inaccuracies and lack of opportunity for issuers to respond to recommendations.
- Concern that proxy advisors can become unregulated corporate governance “standard setters” rather than commentators on companies’ practices.
Many in the US will be watching the CSA’s actions in this area with great interest.