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Computershare's submission on Ontario Capital Markets Modernization was sent to the Taskforce in early September. As we have previously shared, the Ontario Capital Markets Modernization Taskforce, an independent panel established by the Ontario Government in February 2020, released its initial findings on recommendations of reform for Ontario capital markets in July. Following the release, they sought stakeholder input to assist in refining their final recommendations to the Minister of Finance by year end. The recommended reforms were high level and covered many aspects of the Ontario capital markets. They included improving regulatory structure, promoting competition, fostering innovation, modernizing enforcement, enhanced investor protections, proxy and corporate governance.

Our submission particularly addressed proposed improvements to transparency of beneficial owners for issuers and changes to proxy voting processes, topics that Computershare has long advocated. Additionally, we highlighted the importance of ensuring that the regulatory obligations and associated time and cost demands on issuers are proportionate and fair, with the reduction of regulatory burdens where possible while maintaining the integrity and transparency of capital markets.

Our response:

  1. Supported moves to improve transparency of beneficial share ownership via new or increased reporting obligations on institutional investors, including by:

     

    • reducing the ownership threshold for early warning reporting disclosure from 10% to 5%; and
    • adopting new periodic filing requirements for institutional investors.
  2. Addressed proposed changes to the proxy system, including:
    • the elimination of the 'NOBO/OBO' (non-objecting beneficial owner/objecting beneficial owner) status and introduction of issuer choice to direct proxy communications and vote tabulation for all beneficial owners (not just NOBO);
    • the requirement that universal proxy ballots be used for contested meetings; and
    • rules to prevent over-voting.  

As the proposals were very high level, we drew attention to the need for careful consideration of implementation mechanics in each of these proposed changes to the proxy system. This is necessary particularly in light of the highly intermediated structure of the current proxy system and the dominant control over beneficial owner data by one major proxy service provider. Improvements to proxy processes, in particular to support cost-effective access to OBO and NOBO data, need to address this centralized control over data.

Regarding the proposal that issuers be required to obtain the DTC omnibus proxy for every meeting, we requested that a review of the handling of the omnibus proxy be conducted and that appropriate issuer education on this process should occur before any obligation on issuers is codified. We also supported transitioning to an 'access equals delivery' model for communications and progressing digitization.

Computershare has been actively engaged in the discussions around proxy reform and market process improvements for many years and welcomed the opportunity to continue to discuss mechanisms for implementation of these proposed measures.

If you have questions on the details of our comments, please contact Claire Corney, Senior Managing Director, Regulatory & Market Initiatives at claire.corney@computershare.com.