On June 27, 2013, the Ontario Securities Commission (OSC) released OSC Staff Notice 11-768 Notice of Statement of Priorities for financial year to end March 31, 2014 (Statement of Priorities). The Statement of Priorities sets out the key regulatory priorities of the OSC for its 2013-2014 financial year.
While a number of issues identified by commenters on the OSC’s draft statement of priorities were not included in the final Statement of Priorities, the OSC confirmed that it still plans to address many of those issues, including the Ontario Government’s proposed initiative to increase the representation of women on boards of directors of public companies. View our bulletin entitled OSC Releases Consultation Paper Regarding Disclosure of Gender Diversity Practices.
Key Regulatory Priorities
Shareholder Democracy and Protection: The OSC will seek to facilitate the adoption of majority voting requirements with respect to the election of directors of issuers listed on the Toronto Stock Exchange (TSX). The TSX currently has “comply or explain” requirements with respect to majority voting that require an issuer to either adopt majority voting or explain why it has not adopted majority voting. The Statement of Priorities does not mention whether the OSC has any plans to implement majority voting for the election of directors of issuers listed on the TSX Venture Exchange. View our blog entry entitled Not Every Board of Directors is on board with Majority Voting.
In addition, the OSC, together with other members of the Canadian Securities Administrators (CSA), has published CSA Consultation Paper 54-401 Review of the Proxy Voting Infrastructure outlining and seeking feedback on issues related to the proxy voting system. The CSA has requested comments on two key issues:
- whether accurate vote reconciliation is occurring within the proxy voting infrastructure; and
- the type of end-to-end vote confirmation system that should be added to the proxy voting infrastructure.
Finally, the OSC plans to continue to develop policy initiatives regarding shareholder democracy and protection, including further development of the previously proposed rules regarding shareholder rights plans.
Access to Capital Markets: The OSC will continue to review the prospectus exemptions in order to determine whether there is potential to foster greater access to capital markets for issuers while maintaining an appropriate level of protection for investors. In December 2012, the OSC published a consultation paper regarding considerations for new capital raising prospectus exemptions. The OSC will continue to engage with stakeholders and will seek to publish a progress update before March 31, 2014.
Compliance Focus on Suitability: The OSC will continue its compliance reviews of high risk areas/registrants regarding investor suitability requirements. In 2013, the OSC published a report on the results of its 2012 review of portfolio managers and exempt market dealers to assess compliance with the know-your-client, know-your-product and suitability obligations. For more information on the 2012 review. See our bulletin OSC Publishes Suitability Compliance Sweep Results.
In 2013-2014, the OSC aims to:
- complete the “next steps” identified in its 2012-2013 compliance suitability sweep and publish the results;
- publish guidance regarding suitability for registrants; and
- refer serious cases of unsuitable advice to the enforcement branch of the OSC.
Securities-related Misconduct: The OSC has revitalized its focus on identifying, investigating and stopping criminal and quasi-criminal offences relating to financial crime. The OSC will rely on strategic alliances with policing agencies and will seek to make better use of technology in order to vigorously pursue serious securities-related misconduct.