BULLETIN #0366 – M
April 16, 2009
For Distribution to Relevant Parties within your Firm
Task Force on Governance Issues – Comment Solicitation
Reference is made to MFDA Bulletins 356-M and 365-M. The Task Force has now had three
meetings to consider the issues described in these Bulletins. The Task Force is seeking
preliminary comment from Members to assist it in developing its initial recommendations for
consideration by the MFDA Board.
Specifically, the Task Force is currently exploring the following possible course of action and
would like Member input on this approach or any other suggested approach Members may have.
Further consultation with Members will take place once a firm proposal is reached.
Course of Action Under Consideration:
1. Consider a special meeting of Members to confirm the aspects of By-law 15 as proposed at
the 2008 AGM that appear to be supported by most Members, together with one or more of
the following initiatives listed below.
2. Amend By-law 1 to increase the Board size to 15, thereby adding an additional Industry and
Public Director. This would enable the Governance Committee to better ensure that all
Member constituencies are adequately represented on the Board.
3. Amend By-law 1 to require that at least two of the Industry Directors represent Level 1, 2 or
3 Members. This would be coupled with requirements in the Terms of Reference of the
Governance Committee described in Part B below that a ‘small’ and ‘medium’ size Member
must be represented on the Board.
Part B. Change Terms of Reference of Governance Committee
4. Consider amendments to Governance Committee’s Terms of Reference to provide that the
Committee, in recommending nominees to the Board, will take into account the following:
i. In the case of Public Directors:
o An appropriate cooling off period (e.g. 1-2 years) for nominees previously
associated with a Member or the industry; and
o A process for taking into account potential conflicts of interest such as material
business or other relationship with Membersindustry that could interfere with
the exercise of independent judgment.
ii. In the case of Industry Directors:
o Diversity of membership based on size, business type and ownership structure;
o At least 1 nominee will represent a ‘small’ size Member with less than 10 APs
and AUA of less than $100 Million; and
o At least 1 nominee will represent a ‘medium’ size Member with 10 – 100 APs
and AUA of $100-$500 Million.
iii. In the case of all Directors:
o Appropriate regional representation;
o Appropriate gender representation;
o Appropriate experience; and
o Previous or current significant enforcement, compliance or other regulatory
Part C. Changes to, and Full Transparency of, Nomination Process
5. Consider changes to the Director nomination process to allow for greater clarity and
participation by Members. Possibilities include:
i. On a yearly basis, invite non-Director Member representatives to participate with
the Governance Committee in its consideration of eligible nominees.
ii. Rewrite and make more specific the nominating principles, criteria and processes
for Director nominees.
6. Provide greater transparency to the nomination process using the Members’ Only Section of
the MFDA website, including:
i. Each year at the time of Director nominee solicitation, advise the Members of:
o the Industry Directors resigning or whose terms expire;
o the Industry Directors eligible for reappointment; and
o the sector type the Board is seeking to fill (e.g. small Member) and specifically
seek nominations from that sector.
ii. Communicate the objective screening criteria that will be employed to determine if
a proposed Industry Director nominee is ‘eligible’ for consideration (i.e. no
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significant complianceenforcement concerns or sector type already represented on
iii. Communicate the principles, criteria and processes the Governance Committee will
take into account in its consideration of the eligible nominees; and
iv. Advise Members of all eligible Industry Director nominees being considered by the
Committee (i.e. name, Member, Member type, number of APs, AUA and
geographic location) and solicit Member comments.
Request for Comments by May 16, 2009:
Members are invited by the Task Force to forward their comments on this proposal or any other
proposal to the attention of Jason Bennett, Corporate Secretary, at 121 King St. West, Suite
1000, Toronto, Ontario, M5H 3T9 or firstname.lastname@example.org.
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