The Canadian Securities Administrators recently announced the adoption of amendments to National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer (“NI 54-101”) and National Instrument 51-102 Continuous Disclosure Obligations (“NI 51-102”), along with related forms and companion policies (collectively, the “Amendments”).
The Amendments are principally aimed at reducing the costs of holding shareholder meetings by allowing for electronic delivery of proxy-related materials and include the following key features:
- providing reporting issuers with a new notice-and-access mechanism (“notice-and-access”) to send proxy-related materials to registered holders and beneficial owners of securities;
- simplifying the process by which beneficial owners are appointed as proxy holders in order to attend and vote at shareholder meetings; and
- requiring reporting issuers to provide enhanced disclosure regarding the beneficial owner voting process.
Under the new notice-and-access process, a reporting issuer can deliver proxy-related materials by posting the relevant information circular (and, if applicable, other proxy-related materials) on a website that is not SEDAR, sending a notice informing beneficial owners that the proxy-related materials have been posted, and explaining how to access them. The notice must:
- contain basic information about the meeting and the matters to be voted on;
- explain how to obtain a paper copy of the information circular (and, if applicable, annual financial statements and annual management discussion and analysis (MD&A)); and
- explain in plain language the notice-and-access process.
In order to use notice-and-access, a reporting issuer must:
- set the record date for notice of the meeting at least 40 days before the meeting;
- file a notification of meeting and record dates containing information about the meeting and its use of notice-and-access on SEDAR; and
- file the notification at least 25 days before the record date for notice (i.e. at least 65 days before the date of the meeting) where the issuer is using notice-and-access for the first time.
For meetings subsequent to the first meeting for which an issuer uses notice-and-access, the issuer can abridge the timeline for filing the notification of meeting and record dates to three business days before the record date for notice. A notice package can be sent by mail or, if prior consent has been obtained, electronically. In addition, if a service provider offers an e-delivery method (e.g. an email is sent with hyperlinks to all the proxy-related materials) that is distinct from notice-and-access and that is otherwise compliant with securities legislation, such delivery method can continue to be used in conjunction with notice-and-access.
NI 51-102 has been amended to require certain additional disclosure in the information circular if an issuer is using notice-and-access, including a statement that the issuer is sending proxy-related materials to registered holders or beneficial owners using notice-and-access and certain enhanced disclosure of the voting process in the information circular.
Notice-and-access is also available in connection with a proxy solicitation that is not a solicitation by management of an issuer and can be used to send annual financial statements and MD&A to shareholders in place of the current annual request method set out in NI 51-102.
The Amendments have also streamlined the process by which beneficial owners may be appointed as proxy-holders in order to vote for the securities held by such beneficial owners at shareholder meetings. An issuer (or an intermediary, as applicable) is now required to appoint a beneficial owner, or a nominee of a beneficial owner, as proxy-holder if such beneficial owner has provided written instructions to that effect. The issuer or intermediary, as applicable, must make the arrangements necessary to appoint a beneficial owner, or a nominee of a beneficial owner, as proxy-holder without expense to the beneficial owner.
The Amendments came into force on February 11, 2013; however, the new notice-and-access feature can only be used in respect of meetings that occur on or after March 1, 2013.
If you have questions about the new notice and access provisions, contact any member of Clark Wilson LLP’s Corporate Finance & Securities Group.