FAIR Canada has provided
to the Canadian Securities Administrators ("CSA") on their Consultation Paper 52-404, Approach to Director and Audit Committee Member Independence. FAIR Canada does not support the proposed changes and believes that the current approach to determining director and audit committee member independence, which strikes an appropriate balance between prescriptive and principles based elements, should not be weakened. Lessening or eliminating the bright-line tests that have been used for over a decade to assess director and audit committee member independence would be a step backward and lead to less investor confidence in the capital markets.
FAIR Canada makes three recommendations to improve corporate governance so as to strengthen confidence in our markets and investor protection. First, it should be made clear that the independence rules and guidelines are minimum requirements, and not an exhaustive list. Second, the current independence regime should require that the majority of audit committee members and directors of venture issuers also be "independent" as defined by NI 52-110, or another suitable definition. Third, the CSA should apply its current approach to independence to the governance of group scholarship plan trusts and foundations. Specifically, there should be a requirement that the majority of the board of a group scholarship trust should not have a financial interest in the distributor and should meet the test of independence.