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STAC Recommendations to CSA NI 54-101 Committee. Presenters: Bill Speirs – President Terry Martinuk – Director Bob Mackenzie - Director. January 24, 2008. NI 54-101 Objective: Reasonable Cost. Issue: Mandatory receipt of complete non-objecting beneficial owner (NOBO) files Challenges:

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Presenters bill speirs president terry martinuk director bob mackenzie director

STAC Recommendations to CSA NI 54-101 Committee

Presenters:

Bill Speirs – President

Terry Martinuk – Director

Bob Mackenzie - Director

January 24, 2008


Ni 54 101 objective reasonable cost
NI 54-101 Objective: Reasonable Cost

  • Issue:

    • Mandatory receipt of complete non-objecting beneficial owner (NOBO) files

  • Challenges:

    • Average NOBO file:

      • 50% want all material

      • 40% want special meeting material

      • 10% do not want any material

  • Impact:

    • 100% average increase in data costs for annual general meetings (AGMs)

  • Solution:

    • Require intermediaries to supply data as per search request

  • Benefits:

    • Immediate reduction in file cost

    • Purchase of non-material data no longer required

    • Enhanced flexibility as issuers can select data as required

    • Possibility of Broadridge being able to reduce suppression fees

    • Reduced fees for non-useful information and move towards reasonable costs


Ni 54 101 objective equitable treatment for all shareholders
NI 54-101 Objective: Equitable treatment for all shareholders

  • Issue:

    • Legal proxy

  • Challenges:

    • Complex process

    • Not fully understood by beneficial owners

    • Unduly lengthy process

    • Legal proxies usually received after proxy cut-off – or not at all

  • Impact:

    • Makes it difficult for shareholders to vote their shares

  • Solution:

    • Eliminate the legal proxy concept

  • Benefits:

    • Existing proxy appointee process is more efficient and provides identical rights to legal proxy

    • Proxy appointee process mirrors process for registered shareholders and is more equitable

    • Decreases chance of disenfranchisement due to logistics of paper movement for OBOs and NOBOs


Ni 54 101 objective reasonable cost and efficiency
NI 54-101 Objective: Reasonable cost and efficiency shareholders

  • Issue:

    • Voting Instruction Form (VIF)

  • Challenges

    • Multiple forms

    • Lack of clarity of voting process

    • Complex process for shareholders who want to attend and vote at AGMs

  • Impact:

    • Increased cost

    • Does not meet the Canadian Coalition for Good Governance (CCGG) goals

    • Disenfranchisement at AGM

  • Solution:

    • Implement use of Omnibus Legal Proxy

  • Benefits:

    • Reduction in costs

    • Enhanced clarity – easier to read, understand and tabulate

    • Improved opportunity for issuer branding

    • Enables NOBOs to effectively become proxy holders with the same status and rights as registered holders

    • Standard process for large groups of beneficial and registered holders

    • More efficient and timely process


Ni 54 101 objective reasonable cost and efficiency1
NI 54-101 Objective: Reasonable cost and efficiency shareholders

  • Issue:

    • Increased objecting beneficial owner (OBO) delivery charges by Broadridge of issuer mailings directed to non-objecting beneficial owners (NOBOs)

  • Challenge:

    • 25% increase in cost per OBO to about $1.25

  • Impact:

    • Discourages issuers from mailing directly to NOBOs

    • Material waste if Broadridge refuses to mail to OBOs

    • Increase in number of issuers who refuse to pay for delivery to OBOs

      • In 2007, about 800 issuers refused to pay for delivery to OBOs

    • Disenfranchisement of a group of holders

    • Irritation and dissatisfaction among issuers over Broadridge pricing

  • Solution:

    • Beneficial holder data should be available to all service providers at the same cost regardless of issuer elections

  • Benefits:

    • Increased delivery to OBOs

    • Additional retail voting

    • More efficient marketplace and reasonable costs


Ni 54 101 objective reasonable cost1
NI 54-101 Objective: Reasonable cost shareholders

  • Issue:

    • Lack of control over Broadridge fees

  • Challenge:

    • 81% average increase in Broadridge fees since 2004

  • Impact:

    • Issuers feel forced to use Broadridge to control costs

    • Rising fees act as a barrier to entry

    • Makes it uneconomical for some providers to invest in the necessary technology

  • Solution:

    • Introduce price controls or make data available to all issuers and their service providers at the same rate

    • Look to other jurisdictions for comparable rates

  • Benefits:

    • Enhanced control over fees and more reasonable costs

    • Improved marketplace efficiency through the addition of new vendors

    • Faster delivery times


Ni 54 101 objective efficiency and reasonable cost
NI 54-101 Objective: Efficiency and reasonable cost shareholders

  • Issue:

    • NI 54-101 provides for the use of an Abridge Time feature to reduce effort and costs of two search processes

  • Challenge:

    • A "special handling" charge is applied by Broadridge to those issuers who choose to use the abridging feature

  • Impact:

    • Small issuers – who could use abridging to reduce costs – often do not use this feature as result of the "special handling" charge

    • Dissatisfaction with the process

    • Higher costs for small issuers

  • Solution:

    • Ensure issuers who are able to comply with the abridging requirements are not financially penalized for doing so

  • Benefits:

    • Reduced costs

    • Improved efficiency as only one search is required


Ni 54 101 broadridge price increases 2002 2006
NI 54-101 shareholders Broadridge Price Increases: 2002 - 2006

Percentage price increase

Number of beneficial holders for each issuer


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