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The Canadian Securities Administrators and industry representatives, including Broadridge, held a series of “Proxy Roundtable” meetings in order to create detailed operational protocols to tabulate votes through share positions held through intermediaries. On March 31, 2016, the CSA published its proposed protocols in its “Final Report on Review of the Proxy Voting Infrastructure and Request for Comments on Proposed Meeting Vote Reconciliation Protocols.”
Based on the input received through this consultation process, the CSA published Staff Notice 54-305 – Meeting Vote Reconciliation Protocols (SN 54-305) on January 26, 2017. SN 54-305 signals a shift in the regulatory framework supporting securityholder voting and the underlying processes that enable it. The new protocols outline a process of accountability whereby every securityholder, regardless of how their securities are held, will be given the opportunity to vote. Whereas the proxy process has historically been focused on distribution of materials, SN 54-305 centres on the vote entitlement of each securityholder to exercise the voting rights they acquired when they invested in a company. Market participants, including issuers, intermediaries, transfer agents and service providers like Broadridge, have clearly defined responsibilities as key entities for their respective parts of the securityholder voting process and those responsibilities will help ensure that every investor’s voting entitlement is supported. These changes are an important step toward end-to-end vote confirmation.
SN 54-305 recognizes that vote reconciliation needs to be accurate, reliable and accountable. It defines that meeting vote reconciliation would consist of several protocols. These protocols describe the administrative processes required to accurately report the full vote entitlement of positions and include:
Each protocol also outlines a “responsible entity” or in some cases multiple entities the CSA expects will fulfill their role in the vote reconciliation process. The voluntary implementation of the protocols will be monitored by the CSA through the 2017 and 2018 proxy seasons to measure the impact of the protocols on the proxy process.
Broadridge has made the necessary process and system changes to support the processing of records for early search and record date. All records will now be votable and reconciled against the entitlements received from CDS, DTC and any omnibus entitlement. This additional level of detail will provide the foundation to develop end-to-end vote confirmation capability between participating entities.
To further support the proxy voting infrastructure, Broadridge made modifications to all omnibus proxies to clearly identify the entity and full vote entitlement of their positions. Broadridge provides omnibus proxies online and through electronic transmission, and in addition has built an auto fax delivery mechanism to provide each tabulator with an electronic image of the paper omnibus proxy. Broadridge is currently working with tabulators to provide the intermediary with confirmation of votes being rejected, prorated or accepted at the meeting as another step toward end-to-end vote confirmation.
Given the shift in focus to vote entitlement, Broadridge will process all records to create a voting file, and then will apply the issuer meeting selection type preference for which beneficial holders will receive proxy material. As a result, the loading and processing of all securityholder records along with the creation of full vote entitlement positions will result in a change to the current fee schedule for beneficial record processing. A new “Record Processing Fee” of $0.125 will be applied to all remaining records not included in the material selection type effective for record dates after January 1, 2018 for proxy related distributions through Broadridge. The $1.00 fee remains unchanged in connection with the securityholder records based on the meeting type as well as securityholder preferences for the distribution of proxy material. This fee will now be referred to as the Distribution Processing Fee. The fees for NOBO lists will not change.
Broadridge remains committed to supporting the evolving proxy system for issuers, intermediaries, investors and all other constituents of this critical capital markets infrastructure.
If you have any questions regarding these changes and their impact on your 2018 proxy project, please contact your Account Representative or Sales Executive. Alternatively, you can contact Broadridge at firstname.lastname@example.org.
CSA Staff Notice 54-305 is available at:
Frequently asked questions: