The CSA today released an update on their consultation process regarding the potential regulation of proxy advisory firms. In view of comments received from various market participants, the CSA have concluded that a policy-based approach providing guidance on recommended practices and disclosure is warranted in response to concerns raised about the services provided by proxy advisory firms. The CSA intend to publish their proposed guidance for comment in the first quarter of 2014.

As we discussed in a post last year, the CSA had published Consultation Paper 25-401 on the subject in June 2012. The list of possible regulatory responses put forth at the time included requiring that proxy advisory firms: (i) separate proxy voting services from advisory or consulting services in order to address potential conflicts; (ii) disclose the analysis behind vote recommendations, as well as the internal procedures, guidelines, assumptions and sources of information supporting the recommendations; and (iii) implement fair and transparent procedures for developing corporate governance standards, and ensure that these procedures and standards are publicly disclosed.

For more information on today's update, see CSA Notice 25-301.