Copyright 2008, Blake, Cassels & Graydon LLP
Originally published in Blakes Bulletin on Securities Regulation, April 2008
Further to our bulletin of October 2007, the Canadian Securities Administrators (CSA) recently implemented proposed amendments to the proxy solicitation and information circular provisions of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) and its related companion policy. These amendments will come into force, subject to ministerial approvals, on July 4, 2008 in all provinces.
The amendments add a new exemption from the information circular requirements in NI 51-102 so that proxies can be solicited, other than by or on behalf of management of a reporting issuer, without preparing and sending an information circular to shareholders if the solicitation is conveyed by public broadcast, speech or publication.
Companion policy CP 51-102 has also been amended to provide guidance on what constitutes a public solicitation. A public solicitation will generally include a solicitation made by a speech in a public forum, a press release, a statement provided through a broadcast medium or by a telephone conference call, a newspaper or magazine advertisement or over the Internet. The CSA propose that a solicitation will generally be considered to be public if it is disseminated in a manner calculated to effectively reach the marketplace. A proxy solicitation to the public will not include a solicitation made by phone, mail or e-mail to only a select group of security holders of a reporting issuer.
Finally, the existing exemption in section 9.5 of NI 51-102 has been broadened so that it applies to a person or company that solicits proxies, not just reporting issuers. In particular, a person or company that solicits proxies and complies with substantially similar requirements of the laws under which the relevant reporting issuer is incorporated, organized or continued shall be exempt from the proxy solicitation and information circular provisions of NI 51-102.
The CSA have stated that the amendments are designed to address the evolution of increased shareholder rights under the corporate law. Current corporate legislation permits a dissident shareholder to solicit proxies without preparing and sending an information circular to shareholders if the solicitation is conveyed by public broadcast, speech or publication. The amendments ensure that securities legislation generally corresponds with the corporate law.
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