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28 | LEXPERT • June 2014 | www.lexpert.ca portunity to reach a consensus or work out a solution." THERE IS ONE fi nal complication in this fi ght over who regu- lates what in Canada. Ottawa. " e federal government has circulated proposals for comment on modernizing the Canadian Business Corporations Act, the federal business statute. Over 235,000 companies are incorpo- rated under the CBCA, including over 700 distributing or pub- licly held corporations — about half the companies listed on the Toronto Stock Exchange. Many of the changes being fl oated could put corporate law right back into the ring with securities law. " e consultation paper asks whether the statute should be more rigorous regarding publicly traded corporations and expand into areas such as mandated board diversity, take-over bids, corporate social responsibility and creating a role for shareholders on dilu- tive transactions. Francis Legault, a senior partner at Norton Rose Fulbright Canada LLP in Montréal, says some of the proposals would just create more overlap. "" ey're proposing a shareholder advisory vote on compensation pack- ages and I think most people's reaction here is that this is something securities regulators are already doing, mandating very detailed disclosure with respect to executive compensation. "So, let me understand this. Disclo- sure is part of securities regulation — but say-on-pay would also be embed- ded in a CBCA statute?" He pauses. "Why?" He's also asking why Ottawa is now considering weighing in on things like voting for individual directors as op- posed to slates, and imposing maximum one-year terms. "" ose things are already covered off by TSX rules. It's strange because their consultation paper doesn't acknowledge that this stuff is already covered off by TSX rules that apply to Canadian TSX- listed companies. It's really strange. "" e proposed CBCA amendments cover all sorts of things. " ey cover over-voting and empty voting, looking for reaction, even as we have consultations by the Canadian Securities admin- istrators on improvements to the back offi ce on voting public- company shares. So there's a disconnect. " e problem is it causes confusion in market participants." Legault is blunt. He hopes the revised CBCA does not beef up its oversight as it's hard to report to two masters giving contradic- tory instructions. "It's something that we'd like to avoid." Sandra Rubin is a freelance legal affairs writer. that staff thinks wasn't a nice thing to do may be the subject of an allegation of acting contrary to the public interest. "It creates so much uncertainty and ambiguity that I think, in eff ect, it runs contrary to the public interest." " ere can be positives to being in front of the regu- lator and not the courts, says Kent Kufeldt, regional leader of the Western Can- ada securities and capital markets group at Borden Ladner Gervais LLP. For one thing, there is no guarantee in most provinc- es that the judge assigned to hear the case will have the business experience to deal with a complex commercial matter. "I think, there's sometimes a reluctance to roll the dice on judges," says Kufeldt. "So you go to the regulator. At least with the regula- tor that's all they do." Also, until a regulatory hearing gets underway, counsel can pick up the phone and explain the client's position to staff . "Once you're before a panel of the securities commission it's very much like a court. But in the interim, when you're dealing with staff , there's an opportunity to have a conversation. And one thing that scares people off is court decisions are black and white. You have to be prepared for that. "If you go to a panel, through that process, I think there's an op- « SECURITIES "The proposed CBCA amendments cover all sorts of things. They cover over-voting and empty voting, looking for reaction, even as we have consultations by the Canadian Securities administrators on improvements to the back offi ce on voting public-company shares. So there's a disconnect. The problem is it causes confusion in market participants." Francis Legault > Norton Rose Fulbright Canada LLP

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