Industry Canada Says It Will Give Exemptions to CBCA Issuers Wishing to Use Notice-and-Access for Proxy Materials
Federally incorporated issuers will need to apply for an exemption from corporate legislation in order to take advantage of the notice-and-access procedure for proxy materials, according to a notice published by Industry Canada on February 15, 2013 (Notice).
The Notice provides at least a partial solution to conflicts between the new notice-and-access procedure introduced by the Canadian Securities Administrators and corporate statutes, including the Canada Business Corporations Act (CBCA), some of which we described in a recent client alert on the topic.
Issuers that submit application materials and pay a $250 fee to Corporations Canada to use notice-and-access may be granted an exemption with respect to the distribution of proxy materials to shareholders for a particular meeting. We understand that renewals of exemptions for subsequent meetings may be available to issuers by submitting a letter seeking a renewal rather than by making a new application.
Issuers using notice-and-access who have received an exemption would no longer be required to deliver paper copies of proxy materials to intermediaries, unless requested by the beneficial owners or intermediaries on their behalf.
While this may resolve the conflict between notice-and-access and the CBCA for management proxy materials, issuers must be aware that the process will not be available to exempt corporations from the CBCA requirement to send financial statements (and the related MD&A) to registered shareholders. In addition, since the Notice only refers to management proxy materials, it is unclear if Industry Canada will grant exemptions for dissident proxy solicitations.
The provincial corporate regulators and the Office of the Superintendent of Financial Institutions Canada, which is responsible for regulating issuers governed by other CBCA-based statutes, such as the Bank Act (Canada) and the Insurance Companies Act (Canada), have not yet issued notices regarding exemptive relief for the use of the notice-and-access procedure by issuers governed by statutes with provisions that limit the use of this procedure.