Securities regulators have granted an exemption to corporate governance watchdog, Fairvest Corp., from advisor registration requirements as long as the firm is primarily giving proxy voting advice.

Fairvest and Institutional Shareholder Services Inc. applied for relief from the requirements to be registered as an advisor for the firms, their officers and employees.

Fairvest, a wholly owned subsidiary of ISS, provides proxy voting advice to institutional investors in Canada. Fairvest advises its institutional clients on their voting as shareholders of public issuers on issues presented to them in management proxy circulars; its advice is usually based on corporate governance considerations and is provided to its clients electronically.

ISS provides similar proxy advisory services to institutional investors in the U.S. It is registered as an investment adviser and is subject to supervision by the U.S. Securities and Exchange Commission.

Fairvest’s institutional clients and ISS’s institutional clients in Canada include public and private pension funds, managers of mutual funds and portfolio managers registered as advisors under applicable securities legislation, all of whom hold investment assets of at least $100 million. Clients look to Fairvest or ISS for proxy voting advice with respect to corporate proposals coming before meetings of shareholders of issuers in which they hold securities, but not for advice with respect to investing in such issuers or the merits of such investments.

Fairvest also provides access to its proxy voting advice to a small number of subscribers who are interested in its voting recommendations for informational purposes. Fairvest also sometimes provide advice on corporate transactions such as mergers and other types of reorganizations, which may result in a trade in securities by institutional clients.

Because a vote on an amalgamation, merger or similar transaction may result in a trade in securities, some doubt exists whether Fairvest and ISS are “advisors” under the legislation and, therefore, whether they are subject to the registration requirements. The regulators have decided that they need not be registered as advisors as long as their business of M&A advice represents less than 5% of the proposals on which Fairvest and ISS provide proxy voting advice to clients in Canada in any year.