The CSA requires reporting issuers to comply with voluntary guidelines and mandatory disclosure requirements relating to corporate governance. The proposal requests feedback regarding the application of the bright line test on the pool of eligible Directors and audit committee members. Some stakeholders have expressed concern to the CSA that the requirements for board independence are overly restrictive.
Overview of the Council’s Comments:
The council does not favour a wholesale review of the CSA’s approach to determining board member independence at this time. We also believe it is important to maintain harmonization with the US board independence regime given the large fraction of Canadian issuers that trade on an inter-listed basis.
The council supports a hybrid approach to determining board member independence relying on both rules and principles. For example, the council supports the application of the bright-line tests (a rules based test) but also supports the principle of board diversity (more women on boards, more diverse educational backgrounds etc.).