CSA Consultation Paper 54-401 Review of the Proxy Voting Infrastructure (the “Consultation Paper”)

November 13, 2013

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CSA Consultation Paper 54-401 Review of the Proxy Voting Infrastructure (the “Consultation Paper”)

Letter Summary:

The CAC is supportive of regulatory measures designed to provide additional information and increase transparency in the capital markets. The proper functioning of the proxy voting system, including accurate vote tracking and entitlement attribution, is, in our view, an essential part of our capital markets. There is an economic value to voting rights, just as there is an economic value to holding shares on the record date for a dividend. A well-run proxy voting system contributes to investor confidence and the integrity of our markets.

Overview of the Council’s Comments:

We appreciate that a complete review of the proxy voting infrastructure is complicated and will take time. The system itself is extremely complex and is not well understood by many market participants, making it difficult to identify issues and solutions.
Unfortunately, those people who would benefit the most from amendments to the system, the individual voters, have diffuse interests, in contrast to the few players involved in the proxy voting system who have a more concentrated interest in any proposed reforms. We believe one of the impediments to moving forward is that no one market participant would seem to have an incentive to expend the time and money necessary to fix the system. Individual investors do not understand the proxy voting system and thus may never be aware that their vote may not have been cast as requested. However, the possibility that not all investors understand voting entitlements equally does not mean that we should not be concerned about protecting those entitlements.