Proxy Reconciliation Luisa Roberto August 27, 2014 The Canadian - - PowerPoint PPT Presentation

Proxy Reconciliation

Luisa Roberto August 27, 2014

The Canadian Society of Corporate Secretaries

1 6 th Annual Corporate Governance Conference

Banff Springs Hotel | Banff, AB | August 24 - 27, 2014

“I ’m a shareholder. I invested good m oney in this stock, here is m y broker statem ent. W hy can’t I vote m y shares at this m eeting?”

The Canadian Society of Corporate Secretaries

1 6 th Annual Corporate Governance Conference

Banff Springs Hotel | Banff, AB | August 24 - 27, 2014

Custody of the Vote

Record date shareholder list:

• Registered shareholders (individuals,

corporations, nominees etc.)

• Depositories (CDS, DTCC).

The Canadian Society of Corporate Secretaries

1 6 th Annual Corporate Governance Conference

Banff Springs Hotel | Banff, AB | August 24 - 27, 2014

• Every vote and appointment received must

reconcile to a position on the registered list.

• Majority of shares are held through

depositories in an intermediated holding system.

• A beneficial holder must advise their

intermediary of their desire to attend the meeting by appointing themselves on the VIF and returning it as instructed.

The Canadian Society of Corporate Secretaries

1 6 th Annual Corporate Governance Conference

Banff Springs Hotel | Banff, AB | August 24 - 27, 2014

Custody of the Vote ( cont’d)

The Reconciliation ( exam ple)

The Canadian Society of Corporate Secretaries

1 6 th Annual Corporate Governance Conference

Banff Springs Hotel | Banff, AB | August 24 - 27, 2014 Additional Omnibus Proxies provided to re-allocate votes – tabulator reduces Tabulator reduces CDS’ position and allocates votes as authorized by the Omnibus Proxy CDS provides a Holders of Record report and Omnibus Proxy on Record plus 2

Registered shareholder: CDS & Co 10,000,000 shares Participant 1 5,000,000 shares NOBO’s (Omnibus from Broadridge) 2,000,000 shares allocated to individual NOBO’s Intermediary 3 2,000,000 shares Intermediary 4 2,000,000 shares Participant 2 4,000,000 shares DTCC (the Depository Trust Company) 1,000,000 shares Numerous Participants – many US brokers Omnibus Proxy sent to Issuer

The Reconciliation

The Canadian Society of Corporate Secretaries

1 6 th Annual Corporate Governance Conference

Banff Springs Hotel | Banff, AB | August 24 - 27, 2014 Additional Omnibus Proxies provided to re- allocate votes – tabulator reduces Tabulator reduces CDS’ position and allocates votes as authorized by the Omnibus Proxy CDS provides a Holders of Record report and Omnibus Proxy on Record plus 2

Registered shareholder: CDS & Co 10,000,000 shares Participant 1 5,000,000 shares

• 1,000,000 shares

NOBO’s (Omnibus from Broadridge) 2,000,000 shares allocated to individual NOBO’s Intermediary 3 2,000,000 shares Intermediary 4 2,000,000 shares Participant 2 4,000,000 shares DTCC (the Depository Trust Company) 1,000,000 shares Numerous Participants – many US brokers Omnibus Proxy sent to Issuer

The Reconciliation

The Canadian Society of Corporate Secretaries

1 6 th Annual Corporate Governance Conference

Banff Springs Hotel | Banff, AB | August 24 - 27, 2014 Additional Omnibus Proxies provided to re- allocate votes – tabulator reduces Tabulator reduces CDS’ position and allocates votes as authorized by the Omnibus Proxy Further Omnibus Proxies provided to ‘cover’ over- reporting CDS provides a Holders of Record report and Omnibus Proxy on Record plus 2

Registered shareholder: CDS & Co 10,000,000 shares Participant 1 5,000,000 shares

• 6,000,000 shares =
• 1,000,000 shares

+ 1,000,000 = 0 shares NOBO’s (Omnibus from Broadridge) 2,000,000 shares allocated to individual NOBO’s Intermediary 3 2,000,000 shares Intermediary 4 2,000,000 shares Participant 2 4,000,000 shares

• 1,000,000 shares=

3,000,000 shares DTCC (the Depository Trust Company) 1,000,000 shares Numerous Participants – many US brokers Omnibus Proxy sent to Issuer

• The tabulator will start receiving vote reports

and appointments from Broadridge.

• The tabulator will reduce the Participant or

Intermediary positions allocated to them by the number of votes reported by Broadridge. When appointments are received, those shares are reserved for their vote at the meeting.

The Canadian Society of Corporate Secretaries

1 6 th Annual Corporate Governance Conference

Banff Springs Hotel | Banff, AB | August 24 - 27, 2014

Beneficial Votes are Reported

Participant 2 4,000,000 shares

• 1,000,000 shares=

3,000,000 shares (available) Participant 2 Votes received: 3,500,000

(overvoted by 500,000 which cannot be tabulated until a correction is made)

Beneficial Votes are Reported ( cont’d)

• Reasons for over vote?
• NOBO position voted by broker (votes

already reserved for NOBO’s) – over vote revoked.

• Trade settled after record date –

supplemental omnibus provided moving vote from seller to purchaser.

• Securities lending – one share may have

two votes if not reconciled.

The Canadian Society of Corporate Secretaries

1 6 th Annual Corporate Governance Conference

Banff Springs Hotel | Banff, AB | August 24 - 27, 2014

Disconnects…

• The tabulator does not have access to the

whole record date mailing list.

• A vote may be reported by an entity

similar but not exactly as an Omnibus Proxy has assigned.

• XYZ Broker Inc votes but an Omnibus gives the authority to

XYZ Broker International. A further Omnibus is required to shift the vote to “INC” or the vote must be revoked and re-voted as “International”.

• Contact information is not always

available.

The Canadian Society of Corporate Secretaries

1 6 th Annual Corporate Governance Conference

Banff Springs Hotel | Banff, AB | August 24 - 27, 2014

• A NOBO may have to appoint themselves

and submit the VIF they received prior to the cutoff.

• The shareholder may have also elected to

not receive materials for meetings, or only to receive materials if the meeting is Special.

The Canadian Society of Corporate Secretaries

1 6 th Annual Corporate Governance Conference

Banff Springs Hotel | Banff, AB | August 24 - 27, 2014

How can the Beneficial Holder Vote at the Meeting?

• An OBO must provide instruction to their

intermediary to appoint them to attend the meeting.

• The issuer may have elected to not pay for

the mailing to the OBO’s, so the holder may not have received a package.

• The shareholder is still entitled to the vote,

but must contact his intermediary to obtain the VIF information.

The Canadian Society of Corporate Secretaries

1 6 th Annual Corporate Governance Conference

Banff Springs Hotel | Banff, AB | August 24 - 27, 2014

How can the Beneficial Holder Vote at the Meeting? ( cont’d)