BCN 2004/28 - Publication for Comment of Proposed BC Instrument 52-509 Audit Committees [BCN - Lapsed]
Summary of the Proposed Instrument
The Proposed Instrument is a streamlined rule that applies International Organization of Securities Commissions’ (IOSCO) standards for audit committees.
The Proposed Instrument would require that a majority of the audit committee members be independent as determined by an objective test. The Proposed Instrument would also require disclosure about the steps taken to ensure that the auditor is independent of management of the issuer.
Related CSA instruments
On March 30, other members of the Canadian Securities Administrators adopted Multilateral Instrument 52-109 Certification of Disclosure in Companies’ Annual and Interim Filings (MI 52-109) and Multilateral Instrument 52-110, which is also entitled Audit Committees (MI 52-110). On June 27, 2003, the Commission published BC Notice 2003/25 setting out its reasons for not adopting these instruments.
Most British Columbia reporting issuers must comply with MI 52-110. It is not our intention that any issuer be obliged to comply with two different sets of standards. For this reason, the Proposed Instrument would exempt an issuer that is subject to, and complies with, MI 52-110.
British Columbia’s new Act and Rules
The government of British Columbia has passed a new Securities Act (S.B.C. 2004, c. 43). We expect to publish draft rules for comment in June. These draft rules will include the same requirements as those set out in the Proposed Instrument. Depending on when the new Act and rules come into force, audit committee requirements may be implemented through the new rules, rather than in a separate instrument.
Request for Comments
We are seeking comments on all aspects of the Proposed Instrument. We also raise the following specific issues.
1. One part of the new definition for independence requires a director to be independent of any “significant securityholder”, being a securityholder that owns or controls 10% or more of voting securities. Should the Commission instead require independence from a control position, which would be a securityholder that owns or controls 20% or more of voting securities?
2. Do you agree with the Commission’s decision to not adopt MI 52-109 and MI 52-110 for the reasons discussed in BC Notice 2003/25?
You can deliver comment letters in hard copy, by fax or by e-mail. Please address your submission to:
Senior Legal Counsel, Legal & Market Initiatives
British Columbia Securities Commission
P.O. Box 10142, Pacific Centre
701 West Georgia Street
Vancouver, BC V7Y 1L2
Fax: (604) 899-6814
Tel: (604) 899-6764
Or 1-800-373-6393 (In BC and Alberta)
All comments received by July 28, 2004 will be considered.
May 28, 2004
Brent W. Aitken
This Notice may refer to other documents. These documents can be found at the BC Securities Commission public website at www.bcsc.bc.ca in the Commission Documents database or the Historical Documents database.