Council of Institutional Investors

CCGG Endorses Universal Proxy
Thursday, October 22, 2015
by: Glenn Davis

Section: CII Governance Alert

The Canadian Coalition for Good Governance (CCGG) endorsed a universal proxy concept and called for amendments to existing proxy rules to facilitate its implementation.

This reform would give shareholders the ability to vote for any combination of management and dissident candidates in contested corporate director elections. It would have no impact on the more than 99 percent of director elections that are uncontested.

While both Canada and its neighbor to the south currently have an opt-in regime for a complete list of board candidates, existing Canadian rules allow a company to circulate a universal proxy even if the dissident group does not consent. By contrast, the United States requires both sides to consent. In practice, the opt-in approach results in shareholders rarely having the flexibility to vote for their preferred combination of candidates.

CCGG’s position shares much in common with CII’s rulemaking petition to the SEC and more recent advocacy following the commission’s roundtable on the subject. Notably, both CCGG and CII support a mandate requiring a complete list of candidates in contested elections. This would ensure that neither a dissident shareholder group nor a company would be able to limit voting to gain a strategic advantage.

Both advocacy groups would not force companies or dissident groups to coordinate and have one card. Although CCGG voices a preference for a single card, both organizations emphasize addressing the crux of the problem: lack of full flexibility in the election of directors.
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