Views on improving the integrity of global capital markets
06 January 2014

Corp Gov Roundup: Pension-Fund Governance, Proxy Adviser Debate, and More

From the reemergence of pension-fund governance in Australia and the Canadian government’s launch of a public consultation on the Canada Business Corporations Act to a new reporting framework from the International Integrated Reporting Council and continuing proxy adviser debate in the U.S., it’s time to span the corporate governance globe to review important developments from the month of December.


The new Australian coalition government has announced plans to revisit pension-fund governance through a recently posted discussion paper. The consultation will revisit extensive reforms of Australia’s 2009–10 Superannuation System (or Cooper Review) that resulted in changes to superannuation obligating directors of trustee companies to properly manage a fund and ensure the trustee acts in the best interest of beneficiaries. Chief among the issues being revisited is the structure of pension-fund boards. Currently about half of pension-fund board members are employee representatives; the other half being employer representatives. The proposed reforms would allow for a more independent board structure. The closing date for comments is 12 February 2014.


In December the Canadian government launched a public consultation on the Canada Business Corporations Act (CBCA). The consultation includes consideration for mandatory majority voting for directors and mandatory say-on-pay ballots for large Canadian issuers.

Issues that have been identified for review as part of the consultation process include:

  • greater transparency of the ownership of corporations to help ensure that they are not used for tax evasion, money laundering, or terrorist financing
  • the adequacy of corporate governance legislation in preventing bribery and corruption
  • the diversity of corporate board members and management teams
  • rules for takeover bids
  • the use of the CBCA’s arrangement provisions to restructure insolvent businesses
  • the role of corporate social responsibility

Comments are due by 11 March 2014.

United Kingdom

The Collective Engagement Working Group, a group of asset managers and owners, recently announced the launch of an investor forum to facilitate collective engagement in U.K. companies. The group is scheduled to become operational in June 2014 and is intended to facilitate collaboration among a wider range of investors both from the U.K. and internationally. The idea for the forum grew out of the Kay Review, and the main objective of the forum is to build trust among institutional investors and promote a culture of long-term strategic vision and wealth creation over time. The forum will operate engagement action groups to address and resolve issues of concern where existing engagement has failed.

United States

It seems that proxy advisers were in the sights of regulators and issuers an awful lot in 2013.

Issuers have long complained about conflicts of interest that may arise when a proxy adviser provides services to both investors and corporate issuers on the same governance issues. Regulators and proxy advisers in a number of jurisdictions are looking into the issue, with increased transparency being the most likely short-term outcome.

In Canada, a review of proxy advisers by Canadian Securities administrators is likely to result in a voluntary set of best practices.

In Europe, that scenario has already played out following the European Securities and Markets Authority (ESMA) consultation regarding the proxy advisory industry in Europe. An industry group of international proxy advisers has been tasked with developing a set of Best Practice Principles for Governance Research Providers. The principles are designed to govern how signatories to the principles interact with other market participants on a comply-or-explain basis. You can also read the CFA Institute comment letter on the principles.

In the U.S., all sides in the proxy advisor debate were on display at an SEC-sponsored meeting on 5 December. You may not have the time to watch all four hours of the discussion, but the meeting is a good primer on where things stand in the proxy advisory issue in the U.S. Whether the result of all this talk is regulation (doubtful) or a universal adoption of a global code of best practice, like the code coming out of Europe (more likely), expect scrutiny of the industry in the year to come. If such increased attention results in more transparency and accountability of the proxy advisory industry, that’s not such a bad thing.


A three-month consultation ended in December with the release of a new reporting framework from the International Integrated Reporting Council. The newest version of the framework provides more information on governance than previous iterations. According to the current framework, “An integrated report should answer the question: How does the organization’s governance structure support its ability to create value in the short, medium, and long term?” See our recent interview with Paul Druckman, CEO of the International Integrated Reporting Council, on what integrated reporting means for investors.

Photo credit: iStockphoto/YinYang

About the Author(s)
Matt Orsagh, CFA, CIPM

Matt Orsagh, CFA, CIPM, is a senior director of capital markets policy at CFA Institute, where he focuses on corporate governance, ESG, and climate change analysis. He writes and speaks frequently on these topics on behalf of CFA Institute. His paper, Climate Change Analysis in the Investment Process was named “Best ESG Paper” by Savvy Investor in 2021.

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