On August 15, 2013 the CSA published a Consultation Paper focused on issues that are directly related to the accuracy, transparency and integrity of the proxy voting infrastructure for a 90-day comment period. The Paper outlines and seeks feedback on a proposed approach to address concerns regarding the integrity and reliability of the proxy voting infrastructure and identified two issues which have the most potential to impact the ability of the proxy voting infrastructure to function accurately and reliably. These issues are:
1. Is accurate vote reconciliation occurring within the proxy voting infrastructure?
Vote reconciliation refers to the process by which proxy votes from registered shareholders and voting instructions from beneficial owners of shares are reconciled against the securities entitlements in the intermediated holding system. There are two main reconciliation challenges. First, the intermediated holding system results in one share having multiple associated entitlements. Unless there is an effective system of reconciliation, there is a risk that valid proxy votes submitted to the tabulator ultimately are discarded because they cannot be properly matched to an appropriate omnibus proxy or registered
position. Second, share lending creates a risk that the same share could be voted multiple times. The CSA wants to better understand whether the proxy voting infrastructure adequately addresses these vote reconciliation challenges.
2. What type of end-to-end vote confirmation system should be added to the proxy voting infrastructure?
End-to-end vote confirmation refers to a communication provided to shareholders that their proxy votes and voting instructions have been properly transmitted by the intermediaries, received by the tabulator and tabulated as instructed. Currently, the proxy voting infrastructure does not contain an end-to-end vote confirmation system for beneficial owners of shares, although efforts
are underway to develop such functionality. Potentially the lack of such functionality can undermine confidence in the accuracy and reliability of proxy voting results. The CSA will review the current development status of an end-to-end vote confirmation system, as well as consider what features such a system should incorporate.
The comment period will end on November 13, 2013.
