Notice

Corporate governance instruments come into force on June 30, 2005

The Securities Commission (Adoption of National Instruments) Amendment Regulations, 2005 (No. 5) come into force on June 30, 2005.  The regulations adopt National Instrument 58-101 Disclosure of Corporate Governance Practices and consequential amendments to Multilateral Instrument 52-110 Audit Committees.

National Instrument 58-101 Disclosure of Corporate Governance Practices

NI  58-101 applies to all reporting issuers except for investment funds, foreign issuers, issuers of asset-backed securities and the like.  The instrument requires issuers to disclose corporate governance practices that it has adopted in specific areas set out in Form 58-101F1.  These are:

• Board of Directors

• Board Mandate

•  Position Descriptions

• Orientation and Continuing Education

• Ehtical Business Conduct

•  Nomination of Directors

• Compensation

• Other Board Committees

• Asessments

Venture issuers are required to disclose their practices under the same headings but with fewer details.   

NI 58-101 also requires issuers to file any written code of business conduct and ethics that they have adopted.

National Policy 58-201 Corporate Governance Guidelines
National Policy 58-201 Corporate Governance Guidelines (NP 58-201) will also come into force on June 30, 2005.  It provides guidance to all reporting issuers on corporate governance practices. The guidelines are not prescriptive, but are intended to aid issuers in developing their own corporate governance practices. 

The guidelines provide for:

·         maintaining a majority of independent directors on the board of directors

·         appointing a chair of the board or a lead director who is an independent director

·         holding regularly scheduled meetings of independent directors at which non-independent directors and members of management are not in attendance

·         adopting a written board mandate

·         developing position descriptions for the chair of the board, the chair of each board committee, and the chief executive officer

·         providing each new director with a comprehensive orientation, and providing all directors with continuing education opportunities

·         adopting a written code of business conduct and ethics (a code)

·         appointing a nominating committee composed entirely of independent directors

·         adopting a process for determining the competencies and skills the board as a whole should have, and applying this result to the recruitment process for new directors

·         appointing a compensation committee composed entirely of independent directors

·         conducting regular assessments of the board effectiveness, as well as the effectiveness and contribution of each board committee and each individual director

Amendments to Multilateral Instrument 52-110 Audit Committees
Amendments to MI 52-110 will also come into force on June 30, 2005.  MI 52-110 came into force on March 30, 2004.  It requires reporting issuers to have audit committees that are responsible for overseeing the issuer's auditors, and other matters relating to the auditors.  

The amendments are to clarify and update the definition of “independence” in MI 52-110. The original definition of independence in section 1.4 was an amalgamation of the definitions of independence adopted by the SEC and the New York Stock Exchange.  These definitions have since been modified.

 

Section 1.4 is amended to divide the definition of independence into two separate sets of requirements in new sections 1.4 and 1.5:  

·         New section 1.4 will correspond to the SEC Independent Audit Committee Member Requirements. 

 

·         New section 1.5 will correspond to the New York Stock Exchange Independent Director Requirement. 

To be considered independent for the purposes of the Audit Committee Rule, an audit committee member must satisfy the requirements of both sections 1.4 and 1.5.

 

To be considered independent for the purpose of the Corporate Governance Proposal, a person must satisfy the requirements of section 1.4 of the Audit Committee Rule.

 Dated June 17, 2005 

Contact:

Barbara Shourounis
Director
Securities Division
Saskatchewan Financial Services Commission
(306) 787-5842
bshourounis@sfsc.gov.sk.ca