Updated Bank Proxy Form Rules

Summary#

This is a proposed replacement of the current proxy rules for banks called the Form of Proxy (Banks and Bank Holding Companies) Regulations, 2023. The change mainly updates federal proxy rules so they refer to the same provincial securities rules (notably National Instrument 51-102) and fixes references that are out of date under the Bank Act.

What it does#

• Replaces the old regulations with a new version that directly refers to National Instrument 51-102 (Continuous Disclosure Obligations) and its Form 51-102F5 (Information Circular), rather than to parts of the Canada Business Corporations Regulations, 2001 (CBCR) that have been repealed.
• Keeps some current federal requirements that are not in the provincial instruments, including:
  • disclosure about indemnities and liability insurance,
  • the percentage of votes needed to approve a matter, and
  • a signed statement by management (and by dissidents for dissident circulars) approving the circular.
• Adds or clarifies requirements:
  • certain executive compensation and director/executive indebtedness disclosures from Items 8–10 of Form 51-102F5 will apply to distributing banks (but not to non-distributing banks with more than 50 shareholders or to bank holding companies);
  • removes some older detailed requirements that applied to dissident circulars (for example, some contract and partnership details).
• Clarifies what kinds of public announcements and shareholder communications do NOT count as “solicitation” (for example, speeches, press releases, some shareholder-to-shareholder messages, and certain professional proxy advice when conditions are met).
• Most of the proposed rules would come into force when registered; two sections about the definition of solicitation would start when a related 2005 amendment to the Bank Act comes into force.

Who's affected#

• Distributing banks (those that are reporting issuers under provincial securities laws) are the main group affected; they already follow the provincial rules that the new regulations refer to.
• Non-distributing banks with greater than 50 shareholders could be affected if they do not already follow the provincial instrument; they are a small group and may see only minor, technical changes.
• Bank holding companies are mentioned; some disclosure requirements will not apply to them.
• Industry groups and regulators involved in securities and bank governance, including the Canadian Bankers Association and the Canadian Securities Administrators (CSA), were consulted or engaged in the background work.

Why it matters#

• The change removes confusing, out-of-date cross-references and aligns federal proxy rules with the provincial securities rules that many banks already follow.
• For shareholders, it aims to make proxy materials clearer and more consistent across provinces so they get the same kinds of information whether their bank is federally or provincially regulated.
• For banks, it should reduce compliance complexity and the chance of conflicting requirements between federal and provincial rules.
• The government says the expected costs are low; distributing banks should see little to no new cost, and any impact on non-distributing banks with >50 shareholders should be modest.
• This is a proposal published on May 6, 2023; interested parties had 30 days to submit written comments.