On July 5, 2018, the Ontario Securities Commission (“OSC”) released its annual Statement of Priorities (the “Statement”) for the financial year to end March 31, 2019. The Statement outlines the most pressing issues that the OSC hopes to address in connection with the administration of the Securities Act, regulations and rules.
While investor protection is a major focal point of the Statement, the OSC also addresses a number of issues that pertain to shareholder rights and proxy contests. As discussed in a previous post, there is a looming question as to whether regulators will implement requirements regarding “say on pay” and executive compensation. In the Statement, the OSC declared that it will not take any imminent action to implement “say on pay” rules, however, they remain committed to monitoring shareholder democracy activities and will continue to evaluate whether there is a need for further action.
Another priority for the OSC is to continue exploring the possibility of required disclosure of environmental, social and governance (ESG) factors that measure the sustainability and ethical impact of an investment in a company. Disclosure of ESG factors is currently used as a method of attracting new investors, however, mandatory disclosure could change the dynamic of this new trend of socially conscious investing.
Consistent with its previous statement, the OSC will continue to focus on diversity issues faced by Issuers, particularly the Women on Boards and Executive positions initiative, in the upcoming financial year. Recent developments in securities regulation, including the “Comply or Explain” disclosure requirements in National Instrument 58-101, have supported this movement toward inclusivity. Going forward, shareholders may soon see more female representation when it comes time to elect their Directors.
Although the OSC will not take immediate action on the issues discussed in this post, it continues to monitor shareholder activism and proxy activity, leaving open the possibility for reforms in the future.
The author would like to thank Tegan Raco, summer law student, for her assistance in preparing this post.