Despite the rosy picture the CSA paints, I was not surprised to learn that many organizations are falling short of their governance disclosure obligations. With respect to National Instrument 58-101 – Disclosure of Corporate Governance Practices, the CSA found “unacceptable” shortcomings in 55 percent of reviewed organizations’ disclosures, compared to 36 percent in 2007. In this instance, reporting is getting much worse, not better.
These findings appeared in a CSA review, the 2010 Corporate Governance Disclosure Compliance Review (CSA staff notice 58-306). The review notes that:
Although significant efforts have been made to comply with the corporate governance disclosure requirements, issuers need to further improve their disclosure. … Issuers should anticipate staff requests for additional disclosure, re-filings or other staff action, where appropriate, if an issuer has not fully met its corporate governance disclosure obligations.
In other words, don’t be surprised if the CSA comes a-knockin’.
The review outlines several areas that require issuers’ attention, including:
- Describing how the organization determines that a director is independent or not
- Disclosing whether the chair or lead director of the board is independent
- Disclosure of the measures the board takes to orient new directors
- Providing a detailed description of procedures to monitor compliance with the board’s code of business conduct and ethics
- Describing the process whereby directors are nominated for the board
The review looks at each of these issues (and more) in detail and provides helpful examples, and as a bonus it’s pretty easy to read.
First Reference Human Resources and Compliance Editor