CSA Maintain Status Quo on Director "Independence"

In October 2017, the Canadian Securities Administrators (the “CSA”) issued a consultation paper to facilitate a discussion about the appropriateness of the current definition of “independence” for directors and audit committee members of reporting issuers. On July 26, 2018, the CSA published Staff Notice 52-330 (the “Staff Notice”) confirming, in light of comments received, that the CSA intend to maintain the current approach to determining independence, which combines a “principles-based” approach with a number of “bright-line” disqualifications.

According to the Staff Notice, the CSA received 27 comment letters from various stakeholders, such as investors, issuers, and law firms. After considering the comments, particularly the general support expressed by commenters for the current approach, the CSA opted to maintain the status quo on the grounds that it is well understood by market participants and would enable issuers to determine, and allow investors to evaluate, independence with certainty. The CSA also noted that changing how “independence” is determined could result in negative consequences to issuers and investors, such as additional costs.

If you have any questions about the current approach to determining director and audit committee member independence, or the Canadian corporate governance regime more broadly, please contact any member of our Corporate Governance or Corporate Finance and Securities Group.


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