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Presenters: Bill Speirs – President Terry Martinuk – Director Bob Mackenzie - Director

STAC Recommendations to CSA NI 54-101 Committee. Presenters: Bill Speirs – President Terry Martinuk – Director Bob Mackenzie - Director. January 24, 2008. NI 54-101 Objective: Reasonable Cost. Issue: Mandatory receipt of complete non-objecting beneficial owner (NOBO) files Challenges:

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Presenters: Bill Speirs – President Terry Martinuk – Director Bob Mackenzie - Director

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  1. STAC Recommendations to CSA NI 54-101 Committee Presenters: Bill Speirs – President Terry Martinuk – Director Bob Mackenzie - Director January 24, 2008

  2. NI 54-101 Objective: Reasonable Cost • Issue: • Mandatory receipt of complete non-objecting beneficial owner (NOBO) files • Challenges: • Average NOBO file: • 50% want all material • 40% want special meeting material • 10% do not want any material • Impact: • 100% average increase in data costs for annual general meetings (AGMs) • Solution: • Require intermediaries to supply data as per search request • Benefits: • Immediate reduction in file cost • Purchase of non-material data no longer required • Enhanced flexibility as issuers can select data as required • Possibility of Broadridge being able to reduce suppression fees • Reduced fees for non-useful information and move towards reasonable costs

  3. NI 54-101 Objective: Equitable treatment for all shareholders • Issue: • Legal proxy • Challenges: • Complex process • Not fully understood by beneficial owners • Unduly lengthy process • Legal proxies usually received after proxy cut-off – or not at all • Impact: • Makes it difficult for shareholders to vote their shares • Solution: • Eliminate the legal proxy concept • Benefits: • Existing proxy appointee process is more efficient and provides identical rights to legal proxy • Proxy appointee process mirrors process for registered shareholders and is more equitable • Decreases chance of disenfranchisement due to logistics of paper movement for OBOs and NOBOs

  4. NI 54-101 Objective: Reasonable cost and efficiency • Issue: • Voting Instruction Form (VIF) • Challenges • Multiple forms • Lack of clarity of voting process • Complex process for shareholders who want to attend and vote at AGMs • Impact: • Increased cost • Does not meet the Canadian Coalition for Good Governance (CCGG) goals • Disenfranchisement at AGM • Solution: • Implement use of Omnibus Legal Proxy • Benefits: • Reduction in costs • Enhanced clarity – easier to read, understand and tabulate • Improved opportunity for issuer branding • Enables NOBOs to effectively become proxy holders with the same status and rights as registered holders • Standard process for large groups of beneficial and registered holders • More efficient and timely process

  5. NI 54-101 Objective: Reasonable cost and efficiency • Issue: • Increased objecting beneficial owner (OBO) delivery charges by Broadridge of issuer mailings directed to non-objecting beneficial owners (NOBOs) • Challenge: • 25% increase in cost per OBO to about $1.25 • Impact: • Discourages issuers from mailing directly to NOBOs • Material waste if Broadridge refuses to mail to OBOs • Increase in number of issuers who refuse to pay for delivery to OBOs • In 2007, about 800 issuers refused to pay for delivery to OBOs • Disenfranchisement of a group of holders • Irritation and dissatisfaction among issuers over Broadridge pricing • Solution: • Beneficial holder data should be available to all service providers at the same cost regardless of issuer elections • Benefits: • Increased delivery to OBOs • Additional retail voting • More efficient marketplace and reasonable costs

  6. NI 54-101 Objective: Reasonable cost • Issue: • Lack of control over Broadridge fees • Challenge: • 81% average increase in Broadridge fees since 2004 • Impact: • Issuers feel forced to use Broadridge to control costs • Rising fees act as a barrier to entry • Makes it uneconomical for some providers to invest in the necessary technology • Solution: • Introduce price controls or make data available to all issuers and their service providers at the same rate • Look to other jurisdictions for comparable rates • Benefits: • Enhanced control over fees and more reasonable costs • Improved marketplace efficiency through the addition of new vendors • Faster delivery times

  7. NI 54-101 Objective: Efficiency and reasonable cost • Issue: • NI 54-101 provides for the use of an Abridge Time feature to reduce effort and costs of two search processes • Challenge: • A "special handling" charge is applied by Broadridge to those issuers who choose to use the abridging feature • Impact: • Small issuers – who could use abridging to reduce costs – often do not use this feature as result of the "special handling" charge • Dissatisfaction with the process • Higher costs for small issuers • Solution: • Ensure issuers who are able to comply with the abridging requirements are not financially penalized for doing so • Benefits: • Reduced costs • Improved efficiency as only one search is required

  8. NI 54-101 Broadridge Price Increases: 2002 - 2006 Percentage price increase Number of beneficial holders for each issuer

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