On January 10, 2011, the Ontario Securities Commission published OSC Staff Notice 54-701 - Regulatory Developments Regarding Shareholder Democracy Issues which confirms their continued review of protections for shareholders' rights and corporate governance and provides an update regarding the status of OSC staff's work in the area. The Notice states that staff is considering the potential development of regulatory proposals regarding the following topics:

  • Slate voting and majority voting for uncontested director elections: Currently directors may be elected by shareholders voting for a slate of directors or by shareholders voting for each proposed director. While institutional investors have recommended withholding voting for slates of directors, securities legislation does not currently address this issue. The OSC is also reviewing whether individual proposed directors should be required to obtain a majority of shareholder votes in order to be elected.
  • Shareholder advisory votes on executive compensation (say-on-pay): While the Canadian Coalition for Good Governance recommends an annual non-binding advisory vote by shareholders on compensation policies and procedures, the OSC is reviewing whether it is appropriate to require such a shareholders' vote.
  • The effectiveness of the proxy voting system: The OSC is reviewing what regulations, if any, need to be implemented to ensure an effective proxy voting system that allows shareholders to make informed decisions and effectively exercise their voting rights at shareholders' meetings.

Further issues may arise as a result of their continuing review. The OSC is soliciting public comments on whether regulation of these issues is desirable and what the scope of such regulation should be. Comments must be received by the OSC by March 31, 2011.