New CSA Exemption Clarifies Proxy Requirements for Uncontested Director Elections of CBCA Public Companies
On January 31, 2023, the Canadian Securities Administrators (CSA) published an exemption (the “Exemption”) that exempts public companies incorporated under the Canada Business Corporations Act (CBCA) from certain requirements of Canadian securities laws that apply to the form of proxy used in uncontested director elections. The Exemption resolves a potential conflict between the requirements for the form of proxy contained in recently enacted amendments to the CBCA and those contained in Canadian securities laws.
Background
Historically, under both Canadian corporate and securities laws, shareholders have been given the option to vote “FOR” or to “WITHHOLD” from voting their shares in respect of director nominees. As a matter of corporate law, a director was validly elected so long as at least one vote was cast in favour of their election. More recently, the widespread adoption of so-called “majority voting policies”, particularly for TSX listed companies, has required directors to receive more “FOR” votes than “WITHHOLD” votes in uncontested director elections to remain on the board (subject to narrow exceptions).
On August 31, 2022, amendments to the CBCA came into effect that require CBCA public companies to provide shareholders with the option to vote “FOR” or “AGAINST” each director nominee in uncontested director elections. If a nominee receives more votes “AGAINST” than votes “FOR”, the nominee is not validly elected as a director of the corporation. Effectively, the amendments impose a statutory majority voting standard for uncontested director elections for CBCA public companies. These amendments caused some confusion among public companies and their counsel about what voting options shareholders of CBCA public companies need to be provided on the form of proxy in uncontested director elections to comply with the requirements of both the CBCA and Canadian securities laws.
The Exemption
The Exemption resolves this potential conflict by providing that, with respect to uncontested director elections, CBCA public companies are exempt from giving shareholders the option to vote “FOR” or “WITHHOLD” and must instead give shareholders the option to vote “FOR” or “AGAINST” each director nominee. The clarity that this Exemption provides to CBCA public companies is a welcome development.
For public companies (and other reporting issuers) not incorporated under the CBCA, Canadian securities laws continue to require them to provide shareholders with the option to vote “FOR” or to “WITHHOLD” from voting in respect of director nominees. It will be interesting to see if other jurisdictions in Canada follow the CBCA’s more shareholder-friendly approach to director voting.
A copy of the CSA Staff Notice can be found here. To discuss the CSA’s exemption from the director election form of proxy requirement, or for any further information, please contact any member of our Capital Markets Group.
Expertise
Authors
Insights
-
Technology
U.S. District Court Finds NBA Top Shot Moments may be Subject to U.S. Securities Laws
On May 12, 2021, a class action law suit was filed against Dapper Labs, Inc. in the U.S. District Court for the Southern District of New York (the “Court”) alleging that Dapper Labs violated U.S… -
Technology
Canadian Securities Administrators Announce Enhanced Pre-Registration Undertaking Requirements for Crypto Trading Platforms
Further to its December 12, 2022 announcement, the Canadian Securities Administrators (CSA) published Staff Notice 21-332 – Crypto Asset Trading Platforms: Pre-Registration Undertakings (“SN… -
REITS and Income Securities
The Legal Industry Reviews Canada - REITs Chapter
Stephen Pincus, Brenda Gosselin, and Bill Gorman have co-authored The Benefits of Canada - Cross Border and Foreign REITs in the first edition of The Legal Reviews Canada.See below to read… -
Capital Markets
2023 Annual Reporting and Proxy Season – Key Areas of Focus
Reporting issuers in Canada are subject to governance standards and continuous disclosure obligations under securities laws and stock exchange rules.From time to time, securities regulators, including… -
Capital Markets
New CSA Exemption Clarifies Proxy Requirements for Uncontested Director Elections of CBCA Public Companies
On January 31, 2023, the Canadian Securities Administrators (CSA) published an exemption (the “Exemption”) that exempts public companies incorporated under the Canada Business Corporations Act (CBCA… -
Banking and Financial Services
The Acquisition and Leveraged Finance Review 9th Edition - Canada Chapter
Jean Anderson, David Nadler, Carrie Smit, David Wiseman, Caroline Descours and Cathy Costa-Faria co-authored the Canada Chapter of The Law Reviews' Acquisition and Leveraged Finance Review 9th Edition…
Featured Work
-
Capital Markets
NorthWest Healthcare Properties REIT $150 Million Supplement and $165 Million Equity Financing
Goodmans LLP acted for NorthWest Healthcare Properties Real Estate Investment Trust (TSX: NWH.UN) (“NorthWest” or the “REIT”) in connection with its $150,006,000 supplement dated March 25, 2022 and in… -
Capital Markets
BSR REIT $115 Million Bought Deal Equity Offering
Goodmans LLP acted for BSR in connection with its public offering of trust units of the REIT to a syndicate of underwriters led by BMO Capital Markets, RBC Capital Markets and CIBC Capital Markets… -
Capital Markets
Playmaker Capital Final Base Shelf Prospectus
Goodmans LLP acted for Playmaker Capital Inc. (TSX-V: PMKR) (“Playmaker”) in connection with the filing of its final short form base shelf prospectus on April… -
Capital Markets
NorthWest Healthcare Properties REIT Completes Public Equity Offering for Gross Proceeds of $172,506,900
Goodmans LLP acted for NorthWest Healthcare Properties Real Estate Investment Trust (TSX: NWH.UN) ("NorthWest" or the "REIT") in connection with its previously announced public offering (the "Public… -
Capital Markets
Medicine Man Technologies NEO Listing
Goodmans LLP acted for Medicine Man Technologies, Inc., dba Schwazze (OTCQX: SHWZ) (NEO: SHWZ) in connection with their listing of common shares on the NEO Exchange – a tier one Canadian stock… -
Capital Markets
Sienna Senior Living Common Share Offering for Gross Proceeds of Approximately $86 Million
Goodmans LLP acted for Sienna Senior Living Inc. (TSX:SIA) (“Sienna” or the “Company”) in the connection with a bought deal offering (the “Offering”) of common shares of the Company (“Common Shares…
News & Events
-
Banking and Financial Services
The Canadian Legal Lexpert Directory 2023 Continues to Recognize Goodmans
We are proud to announce we have once again been recognized in The Canadian Legal Lexpert Directory 2023.85 Goodmans lawyers have been recognized as top-tier in their fields and leaders across… -
Banking and Financial Services
Chambers and Partners Continues to Honour Goodmans with Global Recognition
We are proud to announce Goodmans LLP has once again received top tier recognition from Chambers and Partners in the Chambers Global 2023 Guide released today. Recognition from Chambers and… -
Capital Markets
Emily Ting named 2022 Lexpert Rising Star
Goodmans is pleased to congratulate Emily Ting who has been honoured as one of Lexpert® Rising Stars: Leading Lawyers Under 40 for 2022.Emily Ting is a partner and co-head of a business law group at…