guidelines and regulations binders
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The Canadian Securities Administrators (CSA) is seeking feedback on the regulatory issues surrounding soliciting dealer arrangements.

The practice of companies hiring investment dealers to solicit investors’ votes in proxy contests and other issues raises conflicts of interests and corporate governance concerns.

A CSA staff notice published on Thursday examines these issues and seeks comments on the use of soliciting dealer arrangements, including whether regulators need to develop rules or added guidance in this area. Responses are due by June 11.

According to the notice, while there are already rules governing proxy solicitation and dealer conflicts generally, soliciting dealer arrangements still raise certain regulatory concerns.

For dealers, these arrangements create issues around managing conflicts of interest, and the “risks associated with potential solicitations of proxies,” the CSA says in its notice.

For companies, soliciting dealer arrangements give rise to questions about the integrity of shareholder votes, including whether these arrangements are being used to entrench corporate boards and management.

“The practice of soliciting dealer arrangements raises certain securities regulatory issues, notably around conflicts of interest and the integrity of the voting and tendering process,” says Louis Morisset, chair of the CSA and president and CEO of the Autorité des marchés financiers (AMF) in a statement.

“In light of these issues, we believe it is appropriate to assess how these arrangements are being used and whether further regulatory action is appropriate,” he adds.