Bank Proxy Form Regulations Updated

Summary#

The final rule called the Form of Proxy (Banks and Bank Holding Companies) Regulations, 2023 replaces the older proxy rules for Canadian banks. It updates what proxy forms and proxy circulars must look like by aligning federal rules with the provincial National Instrument 51-102 standards. The Gazette records registration on June 21, 2024 and the regulatory note says the new rules take effect on July 11, 2024.

What it does#

• Repeals and replaces the previous federal proxy regulations for banks and bank holding companies.
• Says the required form of proxy must follow the format set out in section 9.4 of National Instrument 51-102.
• Requires management and dissident proxy circulars to follow Form NI 51-102F5 (Information Circular), with some exceptions for certain banks.
• Exempts some items (specifically Items 8 to 10 and Item 16 of Form NI 51-102F5) for banks that are not distributing banks or that are otherwise exempt.
• Adds or keeps certain extra disclosure items for management circulars, including:
  • the percentage of votes needed to approve matters at a meeting;
  • a statement signed by a director or officer saying the directors approved the circular’s content and sending;
  • the deadline for shareholder proposals under sections 143 or 732 of the Bank Act;
  • details about directors’ and officers’ liability insurance (amounts and premiums) and any policy clauses that could expose the bank to liability;
  • disclosure of indemnities paid to individuals (name, amount, circumstances);
  • information and signatures about audited or unaudited comparative annual financial statements.
• Requires a dissident’s proxy circular to include a signed statement from the dissident approving its content, or an explanation if certain information can’t be obtained.
• Clarifies what communications do not count as “solicitation,” for example:
  • public speeches, press releases, broadcast or widely available ads or communications; and
  • certain communications among shareholders or by advisers to their clients, subject to conditions (such as disclosing conflicts and not acting for a proxy solicitor).
• Lists specific exceptions where those communications would still count as solicitations (for example, if financed by the bank, or if a shareholder is proposing a nominee or an alternative transaction and stands to benefit specially).

Who's affected#

• Distributing banks (banks that are reporting issuers under provincial securities laws).
• Non-distributing banks that have more than 50 shareholders.
• Bank holding companies that must send proxy materials to shareholders.
• Shareholders of those banks, including investors who vote by proxy.
• People or groups who solicit proxies (management, dissidents, proxy advisers).
• The rules will be monitored by the Office of the Superintendent of Financial Institutions (OSFI) as the federal regulator for banks.

Why it matters#

• It aligns federal proxy rules for banks with provincial securities rules, so banks that already follow provincial standards should face less confusion and duplication.
• Shareholders should see more consistent proxy materials across banks, making it easier to compare information before voting.
• The clearer definition of what counts as a solicitation tells shareholders and dissidents when they must follow formal proxy rules — this affects how and when people communicate about voting.
• Some non-distributing banks with more than 50 shareholders may need to tweak their proxy documents to match the new format, although costs are expected to be small.