Headnote
National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions - Intermediary, registrant and custodian clients of a service provider granted exemptive relief from requirements in securities legislation (i) to give beneficial owner a proxy, and (ii) relating to requests for and delivery of legal proxies - Condition of relief is that service provider implements on behalf of its clients an alternate process (appointee process) for beneficial owners to be able to attend and vote at securityholder meetings - List of clients provided part of application will be kept confidential and not made public as client list is of commercially sensitive nature and publication could have serious adverse competitive consequences - Relief (other than confidentiality of client list) will terminate when amendments to National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer that effect the exemption provided come into effect.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c.S.5, as am., ss. 49(5), 147.
National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer, ss. 1.1, 4.5, 9.2, Form 54-101F7 Request for Voting Instructions Made by Intermediary, Form 54-101F7 Legal Proxy
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO
(the Jurisdiction)
AND
IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATION IN MULTIPLE JURISDICTIONS
AND
IN THE MATTER OF BROADRIDGE FINANCIAL SOLUTIONS, INC. (the “Filer”) AND INTERMEDIARY, REGISTRANT AND CUSTODIAN CLIENTS OF THE FILER
DECISION
Background
The principal regulator in the Jurisdiction received an application (the “Application”) from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the “Legislation”) that:
the intermediary, registrant and custodian clients (the “Clients”) of the Filer specified in a list of clients dated as of December 31, 2010 and included with the Application (the “Client List”) be exempted from the requirement under applicable securities legislation that a registrant or custodian (or in the case of Québec, a dealer) (each a “Subject Person”), if requested by a beneficial owner, give to the beneficial owner or his, her or its nominee a proxy enabling the beneficial owner or the nominee to vote any voting securities of an issuer registered in the name of the Subject Person’s nominee or the Subject Person (the “Subject Person Exemption”); and
the Clients as specified in the Client List be exempted from the requirements under National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer (“NI 54-101”) that:
(a) an intermediary deliver a legal proxy to any beneficial owner that requests such legal proxy;
(b) an intermediary include instructions in Form 54-101F7 Request for Voting Instructions Made by Intermediary regarding requesting and obtaining a legal proxy; and
(c) a legal proxy be in the form prescribed by Form 54-101F8 Legal Proxy
(the relief from the requirements in paragraphs (a), (b) and (c) collectively, the “NI 54-101 Exemption”, and collectively with the Subject Person Exemption, the “Exemption Sought”).
Furthermore, the principal regulator in the Jurisdiction received a request from the Filer for a decision that the Client List be kept confidential and not be made public (the “Confidentiality Sought”).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for this application, and
(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (“MI 11-102”) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Newfoundland and Labrador, Prince Edward Island, Nunavut, the Northwest Territories and the Yukon.
Interpretation
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meanings in this decision unless they are otherwise defined in this decision.
Representations
This decision is based on the following representations by the Filer:
The Filer is a service provider whose services include delivery of securityholder communications on behalf of corporate issuers, mutual fund managers and banks, brokers and trust companies, and delivery of other documents in compliance with applicable securities laws.
The Filer’s head office is located in Ontario.
Under NI 54-101, if a beneficial owner wishes to attend a securityholder meeting in person, or appoint a nominee to attend such meeting in his, her or its place, such securityholder must request his, her or its intermediary to issue the securityholder a legal proxy.
There are four separate communications that must occur under these circumstances: (i) the intermediary prepares and sends a voting instruction form (“VIF”) in Form 54-101F7 to each beneficial owner; (ii) a beneficial owner who wishes to attend a securityholder meeting in person, or appoint another person to attend such a meeting in his, her or its place, must request a legal proxy on his, her or its VIF; (iii) the intermediary sends a legal proxy to each beneficial owner who has requested a legal proxy; and (iv) the beneficial owner who has requested a legal proxy must complete and return such proxy to the issuer or its agent prior to the established proxy cut-off time (these communications collectively the “Legal Proxy System”).
Pursuant to National Policy Statement 41 – Shareholder Communication (“NP41”), the predecessor to NI 54-101, the “appointee system” (the “Appointee System”) had been developed. Under the Appointee System, a beneficial owner wishing to attend a meeting inserts his, her or its own name, or that of his, her or its appointee, on the VIF submitted to an intermediary in response to a request for voting instructions. The intermediary then issues a “cumulative proxy” to the issuer’s proxy tabulator or meeting scrutineer, which includes the names of all such requesting beneficial owners or their appointees, the respective numbers of securities held by them and any instructions indicated on the VIF as to how such securities are to be voted. The cumulative proxy is delivered in advance of any voting or proxy deposit deadline prescribed by corporate law or provided for by the issuer.
The Appointee System has been in use for a substantial period of time, and is accepted by intermediaries, beneficial owners and transfer agents. The use of the Appointee System has been incorporated into the Proxy Protocol prepared by the Securities Transfer Association of Canada.
The Filer performs the actions described in paragraphs 4 and 5 as agent for its Clients.
On behalf of its Clients, the Filer has, since the replacement of NP 41 by NI 54-101, continued to make available to beneficial owners the Appointee System as an alternative to the Legal Proxy System.
If the Subject Person Exemption and the NI 54-101 Exemption are granted, the Filer will implement the Appointee System as described in paragraph 5 in lieu of the Legal Proxy System currently mandated under NI 54-101 and the provisions of applicable securities legislation referred to in paragraph 1 under “Background”.
Specifically, a VIF prepared and sent by the Filer to beneficial owners on behalf of its Clients will not include instructions regarding requesting and obtaining a legal proxy, and will give a beneficial owner that wishes to attend, vote and act at the relevant meeting (or designate an appointee do so) the option to fill in a provided line or space, naming the beneficial owner (or his, her or its appointee) as the relevant Client’s proxy to attend, vote and act on the beneficial owner’s behalf at the meeting.
On April 9, 2010, the Canadian Securities Administrators (the “CSA”) published a Notice and Request for Comments – Proposed Amendments to NI 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer and Companion Policy 54-101CP Communication with Beneficial Owners of Securities of a Reporting Issuer – Proposed Amendments to NI 51-102 Continuous Disclosure Obligations and Companion Policy 51-102CP Continuous Disclosure Obligations – Proposed Amendments to NP 11-201 Delivery of Documents by Electronic Means (the “Proposed Amendments”).
The comment period for the Proposed Amendments expired on August 31, 2010.
During the comment period for the Proposed Amendments, the CSA received a submission concerning the Appointee System, as to whether a beneficial owner would be assured of the authority to instruct that an appointee who attends a shareholder meeting shall have discretionary authority to act on matters that are not set out in the meeting notice or voting instruction form, but that may properly come before the meeting. The Filer, to provide greater certainty in respect of such circumstances, is proceeding to add language to the form of the proxy documentation that it delivers to an issuer’s transfer agent or other tabulator to confirm that an appointee will have such discretionary authority and such changes will be effective no later than December 31, 2010
The principal regulator in the Jurisdiction previously granted the Filer by way of a decision dated February 19, 2010, exemptive relief identical in scope to the current Exemption Sought (the “Original Relief”). The Original Relief expires on December 31, 2010.
The Client List is of a commercially sensitive nature, and disclosure of the Client List could have serious adverse competitive consequences to the Filer.
Decision
The principal regulator is satisfied that the decision meets the tests set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Subject Person Exemption is granted to the Filer and its Clients provided that:
(a) The Filer implements the Appointee System on behalf of its Clients in lieu of the Legal Proxy System; and
(b) the Subject Person Exemption will terminate at such time that the Proposed Amendments, in so far as such amendments relate to NI 54-101 and effect the subject matter of the Subject Person Exemption, come into force.
The further decision of the principal regulator is that the Confidentiality Sought is granted.
“James Turner” “James D. Carnwath”
The decision of the principal regulator under the Legislation is that the NI 54-101 Exemption is granted to the Filer and its Clients provided that:
(a) the Filer implements the Appointee System on behalf of its Clients in lieu of the Legal Proxy System; and
(b) the NI 54-101 Exemption will terminate at such time that the Proposed Amendments, in so far as such amendments relate to NI 54-101 and effect the subject matter of the NI 54-101 Exemption, come into force.
The further decision of the principal regulator is that the Confidentiality Sought is granted.
“Michael Brown”