April 23, 2004 CSA

Montréal – Three of Canada’s largest provincial securities regulators are proposing an alternative way to improve the disclosure of corporate governance practices by Canadian companies, saying that more public debate is needed about the best regulatory approach to take.

The British Columbia and Alberta securities commissions along with Québec’s Autorité des marchés financiers have published Multilateral Instrument 51-104 Disclosure of Corporate Governance Practices for comment today.

The proposal comes after some members of the Canadian Securities Administrators, including the Alberta Securities Commission, published for comment on January 16, 2004 proposed Multilateral Instrument 58-101, entitled Disclosure of Corporate Governance Practices, and proposed Multilateral Policy 58-201 Effective Corporate Governance. Those instruments set out “best practices” against which reporting issuers would be required to disclose their corporate governance practices.

The Alberta, British Columbia and Québec regulators say that the format of the required disclosure in the January proposal could pressure issuers to adopt the “best practices” even when it is not appropriate for them.

The regulators noted that “opinions about governance practices have evolved significantly in the past decade and will likely continue to evolve based on issuers’ experience applying the current ideas.” They asked for public comment on whether “codifying current views about best practices could stifle future innovation and enhancement of governance practices.”

The three regulators say that, by proposing the alternative rule, they are not looking to establish two different sets of standards for disclosure of corporate governance practices but rather to ensure that the approach eventually adopted reflects a full consideration of the issues and, ideally, results in a uniform approach across Canada.

“[O]ur objective in publishing the Proposed Instrument is to solicit comment about the type of disclosure that would be most meaningful to market participants, and would most effectively foster sound corporate governance practices,” said the three regulators in proposing their alternative rule.

Public comments should be submitted in writing to the three regulators by June 22, 2004. Addresses and contacts to send the comments are available at the regulators’ websites.

Established on February 1, 2004, the Autorité des marchés financiers (AMF) is the regulatory and oversight body for Québec's financial sector. The AMF consists of the Commission des valeurs mobilières du Québec, the Bureau des services financiers, the Régie de l'assurance-dépôts du Québec, the Fonds d'indemnisation des services financiers and the Inspector General of Financial Institutions.

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