Canadian Lawyer InHouse

TO DO PROXY ADVISORY FIRMS HAVE TOO MUCH POWER? THE DEBATE HAS CHAMPIONS ON BOTH SIDES BUT MOST AGREE CORPORATE GOVERNANCE WILL BENEFIT FROM THE DISCUSSION AROUND REGULATION WHETHER IT HAPPENS OR NOT. REGULATE OR NOT TO REGULATE? BY JENNIFER BROWN W hen the Canadian Securities Administrators issued a call last summer for comment on the potential regulation of the proxy advisory industry, it was inundated with responses from general counsel, their companies, law firms, and others who seemed to have been waiting in the shadows for a chance to vent. Given the response to the CSA's Consultation Paper 25-402: Potential Regulation of Proxy Advisory Firms, while regulators don't appear to be acting quickly to take action, the movement toward some kind of change has "legs" says John Tuzyk of Blake Cassels & Graydon LLP. The input received from reporting issuers, directors, and the investor relations people that work for Canadian companies shows the idea obviously hit a nerve with many Canadian public companies of all sizes, says Tuzyk. "Given the volume of comments advocating some form of action from all these issuers in response to the comment period — there are very few issues of new proposed rules that so many issuers have commented on like this — I would be very surprised if they did nothing." Considerable pressure is coming from the reporting-issuer community and its organizations and director organizations that something happen soon. For example, the Canadian Investor Relations Institute submission to the CSA indicated there have been too many factual errors identified. "It's not that there's been one or two cases where people found mistakes in proxy reports, it seems that almost every issuer who wrote in had a specific experience where they believed factual errors have been made in their proxy reports which then leads to all sorts of problems," says Tuzyk, who has had clients who have experienced this problem. Blakes, which 28 • A PR IL 2013 INHOUSE

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