The Canadian Securities Administrators have decided that companies are too busy to comply with the proposed corporate governance changes published last December.
The CSA is a council of the securities regulators of Canada’s provinces and territories which co-ordinates and harmonizes regulation for the Canadian capital markets. Their proposals aimed to replace a number of governance guidelines and instruments with nine broad principles covering: board structure; audit committees; director recruitment; engagement with shareholders; and the need to create an internal framework for oversight and accountability. Had they been adopted, the proposals would have moved Canada’s corporate governance regime further away from the U.S.’s mandatory rules-based approach.
“Based on the comments received, we do not intend to implement the proposal as originally published. We do not believe that now is the right time to make such changes” said Jean St-Gelais, CSA Chair and President & Chief Executive Officer of the Autorité des marchés financiers. “We are reconsidering whether to recommend any changes to the corporate governance regime.”
CSA Staff Notice 58-305 Status Report on the Proposed Changes to the Corporate Governance Regime outlines its reasoning for sticking with the status quo. Regulators said that they are still considering possible changes to the corporate governance regime, but will not propose any new rules that would take effect before the 2011 proxy season.
Commenting on the announcement, Terence Corcoran, editor of the Financial Post was deeply critical of the CSA’s “flawed approach” to governance reform: “The CSA, having wasted a small fortune and everybody’s time on its reform boondoggle, gave no indication yesterday that it would go back to square one and simply do what it should have done in the first place.”