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CCCA_V5No1_CorpGovernance-FIN.qxd:CCCA_V1No1_DriversSeat-FIN.qxd 2/1/11 6:28 PM Page 22 Cover In fact, adds Leslie McCallum, a lawyer in Torys’ capital Hypersensitive role markets practice, the CCGG is urging boards to be more According to Wright, in-house counsel should be inde- pro-active in their relationship with shareholders. pendent thinkers.“There is a real — and growing — intol- erance [among shareholders] for boilerplate disclosure or Legal function integral simply ticking the box,” he says, by way of example. Generally the legal function in a company is right in the “In-house counsel need to ensure that people in their middle of most governance issues,” agrees Stephen Griggs, company are thinking about corporate governance issues executive director of CCGG, and a lawyer by training. with a view to their company’s own facts and circumstances. “Whether it is disclosure, regulatory disclosure, enhanced “Be prepared to defend your decisions and make sure disclosure being requested by shareholders, engagement you draft your disclosure in a way that allows people to meetings between shareholders and boards, ensuring that understand your thinking,” says Wright. no inappropriate disclosure is made — generally the legal “You don’t want to be in a position, where, after the fact, function is integral in making [corporate] governance hap- you have to go out and put out supplemental disclosure pen,” he says. because people have raised questions about it. So disclosure As a result of the increased complexity, and a number of is a hypersensitive issue for in-house counsel,” he says. emerging corporate governance requirements, it is “In-house counsel has a very important role in terms of inevitable that there is more overlap in what boards and thinking about these issues, raising them with the board, committees need to consider,” says Davies,“in particular on consulting with external advisers, as appropriate, and mak- the risk management side, we’re seeing a bit of an overlap ing sure they are driving the process forward in a way that between committees.” the company’s practices and disclosure are defensible to the “Both the audit committee and the compensation com- maximum extent,” he says. mittee, as an example, may need to examine the same aspects of the business to ensure they are addressing the Global corporate governance requirements of the new legislation in their respective area While the new CSA report [see sidebar] is very current of governance. here in Canada, not all of the themes are new,” says Davies. “And from a disclosure perspective, under the new SEC “Many of the same concerns came out of the U.S. Dodd rules, and the [Canadian Securities Administrators report, Frank legislation and the new SEC [Securities and Exchange released in December] is going in the same direction, this Commission] corporate governance disclosure rules that are process will need to be documented in the issuer’s public applicable to U.S. issuers’ proxy statements,” he says. filings,” he explains. “There are a number of companies like Open Text in “The point is compensation committees will need to Canada that are dual-listed, and therefore need to take look beyond the four corners of compensation-related mat- into consideration legislation not only in Canada, ters to ensure they are not negatively impacting how risk is but in the U.S. as well,” he says. assessed in other aspects of the business,” he says. “The reality is that board of directors depend “In-house counsel has a very important role in making on in-house counsel to be informed; not just sure each of the committees is separately or collectively what the rules are, but what the trends are, turning their minds as to what is required and that process- and what institutional investors are saying, es are in place to ensure that information gets transmitted to and what’s coming down the pipe,” says the board.” Torys’ McCallum. “Since in-house counsel are focused on risk management “Certainly in Canada, you need to be and compliance,a key component is making sure their public aware of not just of what is happening disclosure is accurate and reliable. Also, that the necessary here, but what’s happening in the U.S. internal systems to make sure information makes it way up to and other jurisdictions as well.We live in ALENA GEDEONOVA the board,” agrees Wright, who advises companies, boards of a globalized setting where peoples’ prac- directors and shareholders on corporate governance matters. tices and expectations are broader than 22 CCCA Canadian Corporate Counsel Association SPRING 2011