On November 4, 2011, the British Columbia Securities Commission ("BCSC") published for public comment proposed amendments to Sections 1 and 3 of MFDA By-Law No. 1. The proposed amendments are intended to broaden the range of persons eligible for consideration as public directors on the MFDA board and to increase the number of industry directors participating on the Audit Committee.
The definition of "Public Director" in Section 1 of MFDA By-Law No. 1 will be amended to remove certain restrictions on individuals from qualifying as public directors. Specifically:
- the restrictions limiting an individual who is an employee of a federal, provincial government or territorial Crown agency and members of the federal House of Commons or provincial or territorial legislative assembly will be removed;
- the two-year cooling off period applicable to certain candidates will be, in effect, shortened to one-year with flexibility in some cases to extend the period;
- the restrictions on immediate family members of individuals otherwise disqualified from being considered to be Public Directors will be narrowed; and
- providers of services for significant compensation will not be expressly excluded.
In addition, certain historical restrictions relating to persons associated with either the Investment Fund Industry of Canada ("IFIC") or the Investment Industry Regulatory Organization of Canada ("IIROC") have been removed. Similarly, restrictions relating to persons associated with protection funds covering MFDA members have been removed.
The proposed amendments to section 3.6.2 of By-Law No. 1 will increase the number of industry directors participating on the Audit Committee from 1 to 2 to allow for broader industry input. In order to maintain the current proportional representation, the number of public directors on the Audit Committee will be increased from 2 to 3, and the overall size of the Audit Committee will increase from a total of 3 directors to 5 directors.
The comment period with respect to the proposed MFDA amendments is open until February 2, 2012. Comments should be submitted in writing and sent to both:
Paige Ward, Director, Policy & Regulatory Affairs Mutual Fund Dealers Association of Canada 121 King Street West, Suite 1000 Toronto, Ontario, M5H 3T9
Ann Hamilton, Senior Legal Counsel British Columbia Securities Commission 701 West Georgia Street P.O. Box 10142, Pacific Centre Vancouver, British Columbia, V7Y 1L2.
All comment letters will be posted to the MFDA website at www.mfda.ca.