CSA Provides "Guidance" Not Rules To Regulate Proxy Advisory Firms

Overview

As shareholder activism continues to rise in Canada, the role and influence of proxy advisory firms, particularly Institutional Shareholder Services Inc. (ISS) and Glass Lewis & Co., has become increasingly important. To address concerns raised by market participants, the CSA published Consultation Paper 25-401 Potential Regulation of Proxy Advisory Firms on June 21, 2012. Based on the over 60 comments received, the CSA announced on September 19, 2013, that it would develop a policy based approach to regulate such firms.

On April 24, 2014, the CSA published for 60-  day comment proposed National Policy 25-201 Guidance for Proxy Advisory Firms (the Proposed Policy) to address the regulation of proxy advisory firms — a copy of the report can be accessed  here¹. For the most part, the Proposed Policy merely provides guidance in the form of suggestions that proxy firms "may consider" rather than rules that must be followed, and as such, may not be the